I know a guy who's addicted to brake fluid. He says he can stop any time.
Y'all, I oughtn't be doing this job, because I am highly allergic to Hogwash. I am, quite literally, risking a fatal Hogwash reaction just reading about central banks, banks & governments, let alone thinking, pondering, & writing about 'em. One of these days they're gonna find me here on the floor, four paws in the air, dead as a ball peen hammer.
Take today. US government jobs report said 174,000 new jobs were added & unemployment rate dropped from 8.1% to 7.8%. No. 1, it's a government report & we all know the way to tell a government employee is lying is to watch his lips. If they move, he's lying. No. 2, it's in an election year, but we know NO honest administration would pressure its bean counters to fake statistics. Yes, but we haven't had an honest administration since James K. Polk retired in 1849. No. 3, they way they count unemployment, you are only "unemployed" until you despair & give up looking for a job. Then you are no longer unemployed.
For all these reasons, said report was almost as meaningful as an anemometer in a tornado, but nonetheless, markets, with the attention span of a fruit fly, reacted. If Bernanke is watching unemployment, and it drops, then he will print less money, so inflation will drop & the dollar ought to rise and gold to drop. And since clearly unemployment is improving, stocks ought to rise, too, because the economy is recuperating.
Y'all know this makes no sense at all, but markets bought it, like they always swallow the hogwash that central banks & governments can fix they economy they broke in the first place. I have to change the subject. My throat's tightening up & I'm breaking out in hives.
Not one single event today changed my suspicious mind. I still expect the dollar to stage a surprise rally, & silver & gold to correct. In fact, today hardened my suspicions.
US dollar index yesterday fell out of an even-sided triangle downward, but was that a false breakdown? Today it traded down to 79.103, sharply & suddenly, but just as suddenly climbed back up, leaving behind the V-bottom characteristic of reversals. Ended up trading 79.417, up 5.4 basis points. In other words, it tried to break down, but didn't. Provided it advances Monday beyond 79.45, and doesn't close below that 79.10, the US dollar reversed today. Whether it can now conquer resistance at 80 above, we'll see. Remember, no long dollar rally is needed here to trip silver & gold. They are already vulnerable after a long rally of their own.
Today US$1 = Y78.67 = €0.7678. Euro barely climbed, up 0.04% to $1.3025. Yesterday the head of the wicked criminal enterprise known as the "European Central Bank," Mario "The Enforcer" Draghi, announced that the ECB would soon begin buying bonds. He is a master of the gas bag, with a deep grasp of the Blarney Cannon. He fires the blarney cannon, then doesn't need to follow through with the acts, because with central bankers, words speak louder than deeds.
Yen lost again today, 0.24% to 127.12c. It draweth nigh unto its 200 DMA, 126.19c.
Friends, stocks are not right. Remember one day earlier this week all the indices dropped but the Potemkin Dow rose a skootch? It had that sulfury stench of Nice Government Men all over it. Then today, all the indices save the Dow & the Nasdaq 100 PMI (whatever that is) closed down. Nasdaq lost 0.42%, Nasdaq 100 lost 0.59%, Russell 2000 lost 0.27%, S&P500 even lost a tiny 0.3%, but not the Dow. It gained 0.28%.
Now defenestrate the Nice Government Men -- throw 'em out the window & don't even think about manipulation. Markets as interwoven as these stock indices ought, generally, all rise in step. When all the other indices close down, but the Dow closes up, it's a glaring non-confirmation. Oh, I confess that one swallow doth not a spring make, but this queasy performance twice ought to make the wary swallow hard.
'Twas not a bright day for gold & silver, but neither was it fatal. Gold shaved off $15.50 to close $1,778.60, while silver peeled away 52.5 cents to 3451.6c. Look closer.
Gold's five day chart plainly shows a peak yesterday about $1,795, followed by a sharp slide today. Yet $1,775 contained two thrusts downward, and that, I remind y'all, stands above $1,773-ish support-resistance. It held.
On a longer chart, gold has now drawn two tops, with a spike low to $1,740 between. This is a broadening top, a reversal, unless & until gainsaid by a close above those double tops. The 20 DMA awaits below at $1,767.31. Should gold break that, all those cosmic gobs of trend-following hot money will dump gold quicker than a fool drops a red hot horseshoe.
WHEREFORE although gold closed barely higher (0.5%) this week, next week is more likely to weigh gold down. In fact, my boundaries from last week still hold:
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 3438c & $1,767.31. Any closes thereunder point down.
Correction targets are $1,700, $1,691.90 (50 DMA) and $1,650 for gold, 3200c & 3100c for 3200c & 3100c for silver. If they do fall, expect to last no more than 3 weeks.
Silver marked its low today at 3430c, high at 3509. Silver's 5-day chart is not a reflection of gold's. Silver has a range, call it 3535c - 3420c. It broke downward today and closed nearer the range's bottom than its top. 3420c support therefore becomes worth watching that much more closely.
Panic not, neither lose heart. 'Tis a natural & usual correction silver & gold will make. It will strengthen them just like pruning strengthens a pear tree. By June 2013 $2,000 gold will be ancient history.
"From where the sun now stands, I will fight no more forever." Thus surrendered Chief Joseph & the Nez Perce Indians to the US Cavalry, at Bear's Paw, Chinook, Montana, on 5 October 1877..
On 5 October 1989 evangelist & Christian TV star Jim Bakker was convicted by a Norfolk, Virginia jury of bilking 116,000 "Praise the Lord" TV show followers of $158 million. He was released from prison in 1994 after serving 5 years of his 45 year sentence (a joke from the beginning). During his imprisonment, Bakker's wife and co-host Tammy Faye divorced him because he could no longer afford to pay for her make-up bill.
Y'all cheer up. A glorious fall is coming up & the election season has almost ended.
Whoa! Two more items. First, I thank all of you most humbly for so strongly supporting my new book, At Home In Dogwood Mudhole. Y'all just keep on buying them (and thanks, Brazil, for your order). If you'd still like to order, we're still selling it at http://store.the-moneychanger.com/collections/frontpage/products/at-home-in-dogwood-mudhole-vol1 AHIDM comes with a money back guarantee: If it doesn't make you laugh, cry, gasp, hug your spouse, or jump up & down (any one of the five), I'll refund your money even though I won't believe you, and you can use the book to throw at your smart-aleck brother-in-law.
Next, I want y'all to consider one more time joining us next week for the Transformations & Renewal Gathering. We still have a few places open, & have been preparing like crazy. Check it out at http://transformationsgathering.com/
Y'all enjoy your weekend.
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger