One week can certainly turn things around. For stocks & the dollar, a turnaround upwards, for metals (other than platinum) downward. Is that all there is? Is it the end of the silver & gold bull market? Have stocks begun a new bull market?
Yes, and if frogs had wings they wouldn't bump their little rears when they jump. Just be patient.
Here's the biggest story of the week, although you may not see it mentioned many places. The YIELD on the US 10 year treasury note broke out to the Upside. It gapped up to the downtrend line on Monday, then smartly advanced the rest of this week. Look at the chart here, http://bit.ly/VJ8Kpr
So what does this whisper? Since the yield (interest paid over the life of the bond) is the INVERSE of the bond's price, this implies lower bond prices. It's also not good news for Ben the Beneficent, because the Zero Interest Rate Policy has been the keystone of his rickety recovery arch. The Fed does NOT control interest rates, any more than a flea riding an elephant controls the elephant. Fed controls only the Fed Funds rate, and if the market decides it does not trust the dollar, they will shuck bonds like they were blankets from a leper colony (bonds are only a promise to pay dollars tomorrow, when the dollars will be worth less).
Ben's Zero Interest Rate Policy has also been wreaking havoc in the economy, because pension funds and insurance companies must operate on virtually no interest income when for long years they have assumed 4% - 6%. And of course, Ben's dumb policy has created a bubble in US treasury bonds because his ever lowering interest rates guaranteed the bonds' price would rise.
Too early to say yet exactly what this 10 year yield breakout means, but at the least it means lower bond prices for a while, & headaches for the NGM at the Fed. First big resistance to further rise in the yield come at 24 (2.4%).
A bursting bond bubble might cover everybody in goo.
US dollar index surged yesterday and appeared to break through its downtrend line, but was it real, or only a feint for suckers? Dollar dropped back 7.7 basis points today to 80.491. Dollar cannot maintain upward momentum if it closes below 80, but for now it's headed up.
Euro gained a little today, up 0.21% to $1.3075, but this repairs on damage. Euro has gapped down through its 20 day moving average (1.3128) & is hovering above its clustered 62 DMA ($1.2985) and 50 DMA ($1.2984) Uptrend appears broken beyond repair, but who ever knows with currencies?
Defying even pessimism, the Yen made a new low for the move today, down a whopping 0.98% to 113.45 cents/Y100, and at its lowest level since June 2010. Must be somewhere near a bottom -- monstrously oversold.
Stocks jubilated today. Dow rose 43.85 (0.33%) to 13,435.21, still comfortably above that ol' 13,300 resistance/support. However, they're blocked right now by a long standing internal resistance line. S&P500 rose 0.49% (7.1) to close at 1,466.47.
As they did from June 2012 through September 2012, stocks are forming another Rising Wedge. This pattern is a trickster. It points upward, & will fool you with its apparent strength & enthusiasm, but 'tis destined to respond to gravity, not levitation. Will break down, and hard.
But stocks may rise to a new high, even above 13,660. Right now they are running on hope, not evidence. Regardless how long this rally lasts, eventually economic gravity will take them down. US economy has not recovered, and can't until it purges out all the bad investment from the last boom. Banks haven't cleaned up their balance sheets, real estate remains oversupplied, & prices haven't retreated enough to form a bottom. That will take another 15 years or so.
Sooner or later, stocks will bend their back under those burdens.
Silver & gold suffered again today. Gold lost 25.60 (1.5%) to $1,648.10 while silver lost 77.5 cents (2.5%) to 2989.6.
Then a funny thing happened after the Comex closes: gold shot up nearly $10 and silver nearly 30 cents.
Bollinger bands are a technical indicator too complicated to explain (a 20 day running band at +/1 2 standard deviations from the mean) but fairly reliable. Both silver & gold have now twice punched the bottom band. Points to higher prices immediately
Gold low today was $1,625.25. New low for the move, but it closed nearer the top of today's range ($1,658.43) than the bottom. All today's loss came before New York opened, so st4rainge as it sounds, today in New York gold steadily climbed.
London p.m. fixes have now double bottomed. 21 December 2012 fix was $1,651.50 (a.m. fix that day was $1,648.25) while today's p.m. fix was $1,648. That doesn't answer any question beyond quibble, but points in the right direction.
Downtrend line from recent lows stands about $1,620 today, and from the Sept 2011 high at about $1,610. Final kiss good-bye?
Silver made a new low today at 2920c, just about the downtrend line defining recent lows. A bit further draw, about 2875c, lies the downtrend from the April 2011 high. Again, this appears a likely place to turn around.
I throw my hands up in the air and wait for the market to speak. 'Tis long past time silver & gold should have turned around, but they work on their schedule, not mine. One comforting encouragement is to hear long time gold advocates growing chilly about the bull market. That generally is a sign a significant bottom has been reached.
A bull market climbs a wall of worry -- the bull wants to shake off as many riders as possible. Neither in time nor price has this metals bull market fulfilled reasonable targets, so the best must lie in front of us.
I keep accumulating on the way down. If it falls more, I'll buy more. I remain persuaded that 2013 will take silver & gold up wildly.
On 4 January 1884 in London was established the Fabian Society. Its goal was to gradually transform society to socialism. It was named for the Roman general, Fabius "Cunctator" ("The Delayer") who pursued a slow strategy of harassment and attrition against the Carthaginian general Hannibal, and eventually won. I can't remember where the building is, but in some Fabian Society building is found its symbol, worked into a stained glass window: A wolf in sheep's clothing.
The Fabian Society offers one of the most striking examples of the suicidal impulse in 19th Century English & European society. Most of all, they were anxious to throw off the so-called restraints of Christianity. Their members included silly people, like the Theosophist Annie Besant, and nasty people, like Havelock Ellis, who was a strong supporter of eugenics, that is, snuffing out what he considered those "unfit to carry on the race." Many of them were connected to Madame Blavatsky, the Theosophist poseur and occultist. Ellis later worked & had an affair with Margaret Sanger, enthusiastic eugenicist & Mother of Abortion.
It's instructive that now that the Fabians have won, their victory is seen to be Pyrrhic (named for the Greek general, who won a victory so costly he lost the war). Rather than freedom, their throwing off the "restraints" of Christianity brought only slavery, personal and social. In order to perfect the world, socialism & communism managed to soak the 20th century with the bloodiest wars in human history, killing well over 100 million people. For peace, they gave us a desert. For life, death wholesale & unimaginable. For contentment, never-ending envy.
God save us from do-gooders! Hell hath no fury like a do-gooder armed with government force.
Y'all enjoy your weekend.
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger