Yesterday came the "trial balloon" from the Austrian EC member, today came the "announcement" from the head of the ECB. I told y'all that Euro was getting too low and the dollar too high for those central bankers to stand. Dollar/euro rate just swam too close to the bottom of their pre-determined range. Craftily, they caught an enormous herd of shorts in the euro, as everybody & his brother-in-law has been shorting the euro for months. Nothing feeds a market like panicking shorts. Let us pause here, to get something straight. When you make an "announcement" designed to (mis)lead the market to think one particular way, that "manipulates" the market, regardless whether you bought or sold one euro for one dollar or not. And when the head of the European Central Bank, international criminal & apparatchik Mario Draghi, says publicly he will do "whatever is necessary" to maintain the euro, what conclusion will the public draw? That the euro will rise against the dollar. Unfortunately, they do not draw the correct & inevitable conclusion, namely, that he will inflate endlessly and so in the end gut the euro. But he did panic the shorts, & momentarily re-bloat stock markets. Central banking manipulation mission completed. Now it's 5:00 p.m., let's go have a martini. We saved the world for one more day. US dollar index fell a whopping 80.9 basis points (1.04%) clean through the 83 level to 82.826. When it broke 83.50 about 6:00 a.m. EST the dollar Niagaraed to 82.60 by 10:00, then flattened out exhausted. The central bank criminals have much more work to do before the tame the dollar. It remains above its 20 day moving average (DMA) now 83.04. Yet my admonition a few days ago about markets making new high after new high now bears fruit. The unrelenting fall of US treasury yields (unrelenting rise of their prices) broke yesterday & today, although that reversal has not yet been consummated. We can, then, expect the dollar to drop more not for mere technical reasons, but for overwhelming political necessities pushing central bank criminals. They must appear to ACT, whether their actions help or hinder, and hinder they will. Euro obediently gapped up today from its Tuesday low at $1.2042, clean up to its 20 DMA (123.06), although it didn't close above that mark. It closed up 1.08% at $1.2282 (US$1=e0.8142). To give y'all an idea how low the mighty euro hath fallen, it needs to climb above $1.2693 merely to offer the suspicion its trend hath in truth tergiversated. Yen backed off its attempt to escape its downtrend, dropping 0.05% to 127.87 cents (Y78.2). Tamed. Not about to run away, unless it can clear 128.77c. Stocks sprinted for the top of their recent range (12,950) with a top at 12,931.22. Settled at 12,887.93, up 211.88 (1.67%). (S&P500 rose 22.13 (1.65%) to 1,360.02.) Yet although that excites stock investors like junkies looking at a car trunk full of cocaine, it is "full of sound & fury, signifying nothing." Neither index managed to punch through that neckline hanging overhead. Just to accomplish that wedge of a breakout, that small beginning, the Dow needs to close above 13,050 & the S&P500 above 1,390. Gold cleared another resistance area ($1,608-$1,610) today, confirming yesterday's bump against the even-sided triangle's upper boundary. This also ranks as a breakout through and above that boundary line. In two days gold has bounded from below the middle of the Bollinger Bands to the top band. Strong, but also suggesting it might take a break & fall back. Tomorrow will tell us, within this outline: $1,625 - $1,630 is the next resistance. Can gold clear that? Underneath us is support from $1,600, so gold must hold that. Caution: this may be a short-covering rally that may yet disappoint. It must keep advancing and must not fall below critical support like $1,595 - $1,600. I remind y'all what's going on. Since May gold hath formed an even-sided triangle, a formation foretelling a breakout & big move, but silent as to which direction. Gold has now broken out skyward through the triangle's upper boundary, but every breakout is untrustworthy & double-tongued until it solidly confirms its intentions. Gold will paint the Big Yes on a rally when it closes above $1,640, the 150 day moving average. Silver didn't agree today. While gold rose, silver fell an irritating 1.4 cents to 2743.1c. To my suspicious mind this close looks looks a lot like somebody painting the tape, but y'all know how untrusting I am. Silver reached up and tapped on 2783c, but that came before New York opened, at 7:00 a.m. (Silver touched but did not pierce its 50 DMA at 2777c, & pierced the rising triangle's top boundary, but closed below it.) I cannot resist saying that were I the Nice Government Men avidly desiring to discourage investors fleeing into gold, I would hit the silver market first. Why? It's so much smaller market that it's easier to manipulate. I get more bang for my manipulating dollar. But let all that alone. We can also aver that what we behold on the chart is a plain impulsive upward move from Tuesday's low, and maybe the backing off today displayed only a market completing that wave up. If so, tomorrow might mount the clouds once again. Yet moderate that. On Fridays short term traders with profits tend to take the profits & run so they can have a peaceful weekend on their yachts, not worrying about an open position. "Oh, that Moneychanger's just hedging & talking out of both sides of his mouth!" you might say. Wrong. I'm facing the uncertainties. It appears we have a rally in gold, but I've been sucked in before, so I want confirmation. Still, I would buy some gold here and LOTS of silver. Just to show y'all that "there is nothing new under the sun," on 26 July 1790 the US Senate passed what later became the Funding or Assumption Act. What was all this? The states had huge debts from the Revolutionary War, some trading as low as 10 cents on the dollar. Under the act the federal government assumed these debts. The author of this scheme was Treasury Secretary Alexander Hamilton, centralizer & lover of central banking & every other doleful and woeful government intervention in the economy. As a result of the Act, some speculators gained a bonanza, but, of course Hamilton knew nothing about that, I'm sure. Compare this to the European Union mess today. It's much the same. The states all issued their own currencies, in which their sovereign debt was denominated, & they inflated those currencies (as did the national government) during the war. Their sovereign debt was sadly depreciated, & unlikely to be repaid. The federal government assumed that debt, & suddenly all that bad state debt became valuable. Conceptually this is precisely what that Austrian EC member proposed yesterday, that the ESM take over all the rotten sovereign debt, & fund that by the ECB. As the French say, "The more things change, the more they remain the same." (Except they say it in French, of course.) I reckon we're so docile & stupid the banks don't have to think up new ways to rob us. After all, the old ones are working just fine.
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger
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