Well, something happened today, but who knows why. After Bernanke announced the Fed would add $1.02 trillion to the dollar supply last year, instead of tanking today the dollar actually gained 2.6 basis points. And the inflation-happy stock market turned sad instead. And just in case you are one of those Pollyannas who believe that central banks & governments have got it all figured out & we're "coming out of the woods," Gretel, the top 5 central banks (less Japan, but they're coming shortly) announced today simultaneously that the Fed would extend to 1 February 2014 its swap line to the other central banks, a swap line the Fed used to loan $585 billion (half a trillion, give a billion or so) to foreign central banks so they could keep their own banks afloat on the Global Sea of Liquidity. Think of it as Homeland Security buying up 30 million rounds of ammo. What do they know we don't know? US Dollar index yesterday made a low about 79.70, so it needs to hold on there to keep from falling further. Up above 80 offers a solid barrier. Euro barely rose today, up 0.05% to $1.3078. Can't muster the strength to push through that downtrend line, although it stands above all its moving averages. However, it's in an uptrend, so odds favor a breakout. The Yen fell off a cliff again today, down 0.49% to 119.61 cents/Y100. Yen must be nearing the point at which the rest of the world's Nice Government Men swing into action. Can't imagine them letting the yen drop below 117.64 cents (=Y85 to the dollar). Things just got gloomier & gloomier for stocks as the day wore on. Markets just adore uncertainty, & O'Bama & his dance partner Boehner are keeping the world as uncertain as they possibly can. Dow lost 0.56% (74.73) to 13,170.72 while the S&P500 gave back 9.03 (0.63%) to 1,419.45. This amounts to the Dow being turned back at 13,300 resistance (yesterday's high was 13,329.44). Probably plenty more upside here, but for now the market just can't deal with the schizophrenia pouring out of Washington. Gold today fell a meaty $21 (1.22%) through $1,705 to close Comex at $1,695.60. Silver lost a heart-stopping 4.23% (142.7 cents) and ended at 3228, smashing 3350c & 3300c support, and even cutting through support that had cradled it since early November. Go look at http://bit.ly/SUDFzS Fake-out break-outs occur when a market breaks out of a pattern one way, then immediately wheels on its heel & reverses. That's what silver did yesterday, breaking out of a little even- sided triangle toward the upside, then falling down through it to break out on the downside today. Along the way it made a new low for the move at 3228c. If markets behaved perfectly predictably, it wouldn't be fun. Only target left is the 200 & 300 day moving averages, nested now at 3090c and 3135c. Beneath that lies the uptrend line from the June 2012 low around 2900c. Silver may fall much further, or it may simply torture us by zigging and zagging back & forth until year end. Gold broke $1,705 late yesterday supposedly on Bernanke's statements about the fiscal cliff. (He's against it.) By 9:30 a.m. it had fallen to $1,689.50. It rebounded to $1,701.90, then fell below $1,700 again & spent the rest of the day hanging out at $1,695.60. See the chart here, http://bit.ly/SoDA5t Yesterday gold touched the downtrend line from the late November November high, then reversed vigorously today, gravity-ward. Support stands at the last two lows, today about $1,687.50, about where today's $1,689.50 low struck. What's possible? Gold might hold that line. You'll know that tomorrow. If it doesn't, then the 150 & 200 DMAs stand beneath to catch it at $1,666 or $1,663.56. Beyond that the uptrend line form the June 2012 low stands about $1,650 today. A couple of other things I want to mention. http://bit.ly/Z3RBxN shows the Dow in gold chart. That's one weird rascal, hugging that uptrend line so tightly since mid-November, and hitting the 200 DMA from below today, & a long term (since mid-2007) downtrend line. Either stocks are getting to rally hard against gold by breaking through that point, or they are about to fall back hard. Since the long term trend is down, odds favor fall back hard. Both platinum & palladium have been trending upward since end-October. Platinum took a $33 hit today, but it didn't harm the chart. Palladium 4 days ago hit 706, its September high, and fell back but remains in an uptrend. Today might have marked a breakdown. If you're one of those folks who frets over the uncertainty that governments & central banks inevitably inject into your life, I suggest you move where there isn't either one. Whoops -- sorry. They've crowded all the intelligent life off the planet. You'll have to move to Mars to escape them. Today, a distinctly attractive possibility. It appears that silver & gold are on their way to lower lows before this correction ends. Be patient, be patient. The bull market will raise silver & gold to higher a& higher prices. Keep your eyes on the horizon & off the goofs in Washington. Pay 'em no mind. Eventually they'll get tired & go away. On 13 December 1913, with many members of congress already gone home for the holidays, the Federal Reserve Act was rammed through congress to establish the Federal Reserve system. This time they didn't make the same mistake the 1st & 2nd Banks of the United States had made: they got a charter without any expiry, and they've been feeding off us ever since. On 13 December 1862 Union commander Gen. Ambrose Burnside foolishly threw his forces against entrenched Confederate forces on Marye's Heights behind the city, resulting in about 11,000 casualties, more than twice those of his Confederate opponents. It was another case of technology outstripping tactics. West Point graduates had been taught Napoleonic tactics designed for attack against soldiers armed with muskets accurate at 50 - 100 yards, and wildly inaccurate past that. Thus massing troops and sending them against fortifications worked for Napoleon. Not for Burnside, however, or the many other generals north & South who tried the same over and over. Between Napoleon's time and 1860 the rifle had been perfected. Rifling or grooves in the barrel caused the bullet to spin, making it accurate up to 500 yards, and the advantage swung mightily to defense. On 13 December 1814 Tennesseean General Andrew Jackson announced martial law in New Orleans as British troops disembarked at Lake Borgne, 40 miles east of the city. In January Jackson & his Tennessee militia (okay, there were a few also from Kentucky & Mississippi) would smash the British at the Battle of New Orleans. IS AMERICA TOO BIG? It's pretty odd when somebody called "leftist" agrees with somebody called "right wing." Might be an accident, or it might be that the terms "left" and "right" have lost all meaning, like "big government conservative" & phony Newt Gingrich. Maybe left & right are labels used merely to mislead us so we'll get so busy fighting on the front porch we won't notice the men emptying out our house through the back door. Kirkpatrick Sale, decentralist author of Human Scale (1980) & head of the Middlebury Institute has teamed with Don Livingston of the Abbeville Institute in a four minute video, "Is America Too Big?" Could it be that the source of our social & political problems is our size? Check it out, see what you think. http://www.youtube.com/watch?v=RCNd7h0fsdE&
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger
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