I reckon after big drops today in silver & gold I'll have to re-examine all that optimism I sported yesterday. Let's see . . . Yep, I've re-examined & I am as bullish as ever on silver & gold. I will even explain how, a little later. However, bear in mind that I warned yesterday this would be a toilsome week for silver & gold. Keep trudging, O Weary Americans, the gate to Schlaraffenland, the land where nobody has to work, the beer is free, and the roast chickens fly into your mouth under their own power, lies right around the bend, our Leaders & Gurus assure us. Markets certainly can keep you humble -- several times a day. Hard on the heels of my expectation that stocks would begin underperforming gold & silver, stocks rose mightily and silver & gold fell sharply. I reckon I DO look like a natural born fool. But only for a little while. Veritas temporis filia. Stocks broke through the 13,000 barrier like thirsty longhorns stampeding to an alkali pond. Couldn't stop em if you tried. Dow gained 217.97 points or 1.68%. (I can't remember -- one of y'all remind me -- what day was it the Dow FELL 203.66 points. Was that 6 March?) S&P500 rose 1.81% or 24.87 points to end at 1,395.96. About 100 points of today's rally came after 3:00 p.m. From 10:00 to 3:00 the Dow gained from 13,000 to 13,100. Tail end of the day, the last hour, it jumped another one hundred points. News says stocks had been buoyed by good retail sales reports (government numbers -- need I say more?), then the Bernancubus' open market committee voted to keep interest rates near zero, yakka-yakka-yakka. Today some say the market interpreted all this as meaning more liquidity, a.k.a., printing more money, but if the market's expecting more inflation out of the Fed, why did the dollar rise & silver & gold sink all while stocks rose? Blub, splutter, I don't know, they have to say. Well, at least charts don't prevaricate much, so let's look at them. The Dow traced out a bearish rising wedge, fell out of it downside as the pattern foretells, then against all expectation turned and crossed above its 20 DMA and broke out above last May's high. What can I say? The chart lied. It's headed higher, maybe to 14,000, floating on a sea of fresh money. Besides, if it reaches 14,000, it will almost reach the inflation-adjusted value of January 2000. Friends, I'm going to snatch victory out of the jaws of defeat, or die trying. US dollar index ought to have surprised no one today when it gained 33 basis points (0.42%) to 80.22. 79.90 now will pitch in with strong support while the dollar heads for 82 and above. Higher close tomorrow confirms that upward intention, as it will close above the last high for two days. The yen & euro bowed courteously to the dollar and fell 0.52% to $1.3086 & 0.81% to 120.56 cents (Y82.95). New low for the yen, with no discernible bottom. At least the euro probably won't fall much below $1.2900. Apparently somebody sent out a world-wide announcement today saying "Buy stocks and sell silver & gold at 3:00 p.m. Eastern Daylight Time." That's about when the panic hit the gold market. Gold had closed at $1,693.70, not bad after a $1,685 low, but at a little after 3:00 the bottom dropped plumb out, taking gold from $1,680 to $1,665 faster than a car window will suck a $100 bill out a window when you're doing 80 miles an hour on the interstate. Gold bounced on that right cheerily, about like Play-dough bounces, up to $1,675-ish. Fess up, it's a new low for the week, which will suck gold down toward $1,640. If that breaks, chart offers no comfort & support before $1,550 - $1,525. One more push down is in the deck, to finish the correction off the February 29 high. This shouldn't last more than a week, 10 days. Silver's chart doesn't quite match gold's, although it also shows a fast drop after 3:00 pm.. Low came later as it fell fast in the aftermarket, as low as 3296c. Comex actually closed UP 17c at 3354.4c, so it appeared we'd have another of those one-metal-up/ other-metal-down days that lately presages an up day for both following. Not today. Silver reeled like an punchy old boxer hit with brass knucks. This is getting serious today -- if silver lets go of its hold on 3300c, then look for 3183c, maybe 3150c. Now y'all are scratching your heads wondering what possible Ace in the Hole I might be holding to support my bullish outlook. I believe that silver & gold are putting the finishing touches on upside- down head & shoulders pattern that foretell LARGE rallies. Also, I have been pondering silver's 300 day moving average, checking that against the ancient days of this bull market, and it is flashing a green light. But what do I know? I'm the Tennessee fool who thought yesterday that stocks were about to drop against gold & silver. Now I am not, I promise going to dredge up all the fundamentals -- the inflation, the bad investment not yet liquidated, all the debt, the Moe-Rons running things -- that doom stocks & smile on silver & gold. I'm not even going to say, as I usually do, that the news for stocks is about as good as it gets. Naw, if I said any of that it would just sound like exculpation or self-justification, & I personally would rather wait for events to unfold and show y'all that all by themselves. Shucks, I don't know hardly anything. When you talk about buying stock, all I can think of is rare pigs. One thing you learn from studying history is that DISCONTINUOUS EVENTS -- those great rifts that divide ages and forever change the world from the bottom up -- don't happen very often. Most of the time, today passes about like yesterday did, but every once in a while, something happens, at first perhaps insignificant, that changes everything. On 13 March 1519 Cortez landed in Mexico. When they first laid eyes on him, strange as he, his ships, & his horses might have looked, the watching Indians had no idea that within a short time he would conquer & destroy the Aztec empire that had ruled them for centuries. But if ever there was a discontinuous event, it was Cortez landing in Mexico. Question is, how many of those watching recognized the significance of Cortez' arrival? On 13 March 1884 the US adopted standard time so everybody could be late to class at the same time.
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger
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