Musing back over the yen's performance yesterday, and recalling the current buzz among Those Who Must Talk Whether Mentating Or Not, Asian stocks also rose yesterday, "on Greek Debt Deal Talks" & Japanese industrial production grew faster than economists estimated. A statement so obtuse, so wanting in causal connection, stinks of the same Bimbo Financial Journalism that moved that Canadian TV commentatoress to say gold wasn't a good investment "because it wasn't backed by anything like the US dollar is." Point is, tons of hot money slosheth around the world looking for a likely place to light, hungry for return, & stupidly harkening to the latest news & commentary, groundless though they be. Investment du jour (IdJ) today is US stocks, because there may be a Greek debt deal & Bernanke's indigestion is improving. Tomorrow the IdJ will be European stocks, because there may be a Greek debt deal & Ferkel & Sarcophagus are no longer miffed at each other. Besides, the planets are lining up & Pisces is ascendant in the Fishbowl. And the Japanese are switching to rice from wheat. I'll be glad when the adults come back & take charge again. Okay, I can't dodge it; let's look at today's markets. Now I've heard of heads & shoulders, upside down & right side up, triangles, boxes, wedges, spikes, & double and triple tops, but I don't recall seeing many Big Ws before. Be that as it may, there 'tis on the US Dollar Index chart, a Big W. Breaks down & begins at 79.50, drops to 78.75, rises to 79.45, drops yet again to 78.75, then today rises to 79.50. Man, that's either a PERFECT double bottom, or it's the Nice Government Men painting the tape. What do y'all reckon? Mattereth not. Implication is that a dollar close above 79.50 turns the dollar higher, a close below 78.75 pulls the plug. Dollar index today rose 11.8 magnificent basis points (0.15%, for those of y'all with magnifying glasses) to 79.285. Could it turn and resume its rally from here? Might, but I think the NGM in Japan, Europe, & the US have the dollar on the run, & want to keep it there. After all, a Greek Debt Deal may be near. Disappointing its partisans, the euro today was chipped and clipped for 0.46%, closing down at 1.3080. It's bouncing off its 62 day moving average, a significant moving average for the euro. Also backed through thru the 50 DMA today (131.06). Nothing here suggests the euro is NOT headed higher. As the mysterious schools of investment herring switch from east to west, the Yen rose again today by 0.17% to 131.19c/Y100 (Y76.22/US$1). I am so suspicious it's scary. Scares even me. I keep looking at the dollar selling at about 130 eurocents and about 130 yen, & I keep thinking, "Now isn't that just like Nice Government Men! They pick some silly target number that makes it obvious to a blind man what they're doing, forgetting that nature doesn't round." This looks like a target range ginned up in a meeting over rubber chicken in Basel at the BIS. The smell of the sickroom hovereth yet over stocks. A few indices rose today, but the S&P500 & the Dow were not among them. Dow lost 21.04 points (0.17%) to settle at 12,632.68. S&P500 perched at 1,312.39, down 0.62 point or 0.05%. Folks, y'all lay a ruler across the tops of Thursday, Friday, and on through today. I'll show you a failed breakout attempt today, but nothing else to fertilize respect or optimism. I'll give it this: if the Dow can better 12,700, and the S&P can better 1,320, stocks MIGHT have a chance to creep or crawl higher. Creep or call, not found new inter-generational wealth transfers. But mostly, stocks want to drop. Y'all have observed with me, over the last year or so, that a day when silver drops a leetle and gold rises a leetle, is often followed by a day when both shoot up. Today silver dropped 26.4c to 3323.3c, after making a slightly higher high at 3407c. Now, that might be might form the first half of a key reversal down (new intraday high & lower close, followed by lower close next day), but it might not. Silver still held up at 3300c, and never sank lower than 3292. Cut silver some slack! It's butting its head against a big downtrend line from the August high, & it's still above its uptrend line from the 29 December low. We're warned, it MIGHT drop, but if it works its way through 3400c resistance, y'all can kiss silver good-bye because it will shoot skyward. But silver must hold 3292c. While silver was dropping 26.4c, gold gained $6.80 to $1,737.80, chugging on up a mighty steep mountain. More, gold pushed through $1,740 resistance to $1,747.32 (knocking hard on $1,750) and easily caught a downspike to $1,725.90, proving that support. Like silver, should gold punch through $1,750, all the shorts will flee in panic, clutching their wallets. On the other hand, today also told you that gold cannot afford weakness at $1,725. In bull markets these rallies always climb a wall of worry. People keep asking me if they should buy here, or buy half here and wait to see if metals will drop. First place, I don't know any more than you do. I'm handsome and tall, but I ain't Nostradamus. Second place, as a practical matter I've watched my customers (learned almost as much from them as I have from my children) & those who do best are those who just buy when they have the money, and come back & keep on buying. They don't get too worked up or nervous about where the market is, because they are riding the primary trend for the long term. And that works right well. At least, they're not like me, stuck here sweating that gold/silver ratio. One tiny straw in the wind that suggests metals might not have a great day tomorrow is the nearly 1.5% rise in the gold/silver ratio today. Still waiting for 57.5. I know y'all up in Washington state & New York have been freezing, but we've had unseasonable warmth. We need some hard freezes, or the flies & bugs will eat us up come summertime. On 31 January 1609 the Wisselbank ("exchange bank") of Amsterdam was established. If I mistake me not, unlike most all other banks in history, that one stayed fully solvent & liquid up till Napoleon's time. Two hundred years of solvency is some record for a bank. My, my, how times change! On 31 January 1627 the Spanish government went bankrupt. See how trustworthy government debt always has been? On 31 January 1861 the sovereign republic of Louisiana seized the US mint in New Orleans. Other than a few half dollars, though, and some alleged pattern pieces, the Confederate States never minted its own coinage. From the war's outset specie went into hiding, north and south, & both sides financed the war effort by inflation. Did y'all ever stop to wonder how long wars would last without inflation? Right, about 48 hours, then they'd have to start paying the soldiers & run out of money.
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger
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