I reckon we live in Candide's Best of All Possible Worlds, where we hoi polloi don't have to worry about a thing 'cause our central bank massas are sure taking care of us. Yes, sir! Except for a practically meaningless 8/10% rise in the US dollar index, markets at first glance did nothing. At second glance, however, other shapes appear. Remember, too, that the scoreboard never lies. Silver, gold, stocks, palladium the yen & euro all lost this week. Talk about the Best of All Possible Worlds! Why, US$1 = Y77.98 = E0.7784. It don't get no better than that, central bankers walking hand in hand, depreciating their currencies in perfect time like they were waltzing. US dollar index this week closed 79.922, up 60 basis points for the week & 37.4 for the week. Dollar, if your gonna strut your stuff, you'd better step higher than that! Dollar ranged this week from 79.35 to 80, and failed again today to clear that 80 hurdle. Dollar is dancing with its 20 Day Moving Average (79.97) & if it should pierce that and resistance at 80, might run to its 200 DMA at 80.72 before it collapses again into the dung heap where it belongs. Whoops. I've got to watch that. Start talking about the dollar & my bile just leaks out everywhere. Something about a set-up where private individuals are given the state's powers to steal from the whole world just goes down crossways in my gullet. Back to the thread: My guess is that the US, European, & Japanese central banks have struck a deal to keep their currencies in a range from $1 = Y75 = E0.75 to US$1 = Y83 = E0.83. You are watching them control that. However, should the dollar break 78.60, the last low, the sharks will come in & short like crazy, creating manifold & multitudinous migraines for the Nice Government Men. Yen closed today own 0.49% at 128.23 cents (Y77.98). Euro lost 0.53% to $1.2847 (E0.7784). Both lost steam & faded today, & neither show any signs of liveliness, up or down. In gold terms, both the Dow and the S&P500 are working their sweatiest to break down and fall. Dow in Gold gapped down yesterday & is sitting near its recent lows. S&P500 in Gold didn't gap down but is well below its 200 DMA, 0.8057 oz today against the 200 dma at 0.824. Dow looks even worse, 7.57 oz against a 200 at 7.80 oz. In paper terms the Dow today bounced off its 20 DMA (13,402.12), closing down 48.84 at 13,437.15. Any break below 13,300 - 13,250 would be fatal. However, when Octobers are not deadly months for stocks, they sometimes see tops. Think of October 2007. Be not surprised, therefore, nor amazed, if the Dow runs even to the 14,200 top of that year. 'Twill not be strength, but death throes. For the S&P500 a break below 1,420 would deal death. For both indices, keep bearing in mind that their gains in paper dollar terms will be nugatory, fruitless, barren, feckless, & futile. All the while they will be losing value against gold, for they have already broken down in gold terms. Be not fooled by the Ben Behind the Curtain! Silver today lost 17.1 cents to 3442.4c. Right in step, gold gave up $7.20 to end at $1,770.40. It may confuse y'all that I sound less than sunny about gold & silver, but I'm trying to read the chart honestly. Besides, I am only leery of the short run: the long run is sure, skyward, and sublime. I've got to press on. Alliteration is about to seize up my mind. Both metals have this week traced out what appears to be a megaphone or broadening top. In these patterns, the correction from the first plunge (especially with very strong markets) may reach or beat the high. This is a feint, a fake out, a false signal, for the following plunge will be sharp. I believe we are watching this unfold in silver & gold, but here are the bounds that will yea- or naysay me: Gold above $1,805 (2 day close) with silver above 3525c screams that no correction is coming soon, or Gold below $1,738 (1 day close) with silver below 3336c sets both up for lower prices. The 20 day moving averages, first tripwire of a decline, stand now at 3363c & $1,748. Any closes thereunder point down. Correction targets are $1,700 and $1,650 for gold, 3200c & 3100c for silver. If they do fall, expect it to last no more than three weeks. I repeat: misunderstand me not. Silver & gold have already begun their next leg up that will carry gold above $4,000. The weakness I am expecting is very short-lived and a mere bagatelle compared to the long term outcome. One of the most difficult thing to explain to my customers is that they are FAR, FAR better served in a long term bull market to keep their excess funds in silver & gold rather than in a bank. Today came a gracious example. A customer called to sell some silver & gold to meet a family need. She had converted US$5,000 to gold & silver in October 2008 (good timing). She sold it today at a 90.2% gain -- it was worth nearly twice what she had paid for it. I won't tell y'all about her profit on what she bought in 2006. It's a bull market. That means that year after year, silver & gold become more value -- they don't just hold their own against paper dollars, they GAIN. On 28 September 1785 Napoleon Bonaparte at age 16 graduated from the military academy in Paris, 42nd in a class of 51. So much for the credentials of formal education. On 28 September 1926 was born Mississippi comedian Jerry Clower from Amite County, Mississippi, unquestionably one of the funniest men ever born. If you have not heard his stories about the Ledbetters, find them somewhere. You can hear about the First Banana at http://www.youtube.com/watch?v=flaWvHgMjOU&feature=related And don't miss A Coon Huntin' Story at http://www.youtube.com/watch?v=-AX9QoFhEhI&feature=related WHY I STAY HERE: Why do I live in the Empty Quarter of Tennessee? Just for mornings like this. Driving through Robinson Branch Hollow I turned a bend & there stood six young turkey hens in the road. Two ran off into the brush & the other four took wing, flying ahead of me down the road. Then three veered off but the last kept flying straight up to perch 60 feet above in a sycamore. After I crossed Robinson Branch at the ford I came up the hill and a deer darted across the road, a doe. There's a game trail there where deer often cross. Then her fawn skittered out of the weeds, crossed the road, and disappeared into the woods after her. No cars, no traffic jams, no screaming sirens, no radar traps, no government agents, politicians, or central bankers of any kind. How was your drive to work? Y'all enjoy your weekend.
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger
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