Following appeared yesterday on Zero Hedge at http://bit.ly/12sE2L1 & I couldn't resist opening with it today. Kyle Bass said, "Buying gold is just buying a put against the idiocy of the political cycle. It's that simple."
The week ended in much higher silver & gold prices, but a disappointment today. Stocks are inching toward the cliff-edge ("Yeah, I know, Moneychanger, I've heard that before!" Well, just wait.) and the white metals, platinum & palladium lost traction. Big gainer was the US dollar, parasite of nations, vector & carrier of monetary disease.
Stocks are pushing farther and farther into never-never land. I don't think they will be easily weaned off their addiction to Quantitative Easing, since that's the only force that's been driving them the past five years. I'm just a nat'ral born durn fool from Tennessee, but I am a realist. Think about somebody addicted to meth, a housewife, say. Man, when she first gets started on meth, she has the CLEANEST house in town. She's got everything in order, and she's scurrying around with efficiency born of speed. She manages this for a while very well, but then the meth starts taking its toll. She slows down, & now she has to have it. She starts scratching herself and gets scabs all over her face, then her teeth start falling out. The collapse of this addiction is not far off.
That's about where I figure stocks are. The house is still spotless, the meals still cooked, the kids still picked up on time, but the scabs are starting to show. It won't be long now. But it looks bang-up till it crashes.
Dow today made a new high, up 58.69 (0.33%) to 17,958.79, blowing its hot breath on the back of 18,000's neck. S&P500 rose 3.45 (0.17% to a marginal new high at 2,075.37.
Silver & gold disappointed me today, but little of that showed in the Dow in Gold & Dow in Silver. DiG rose 1.46% to G$311.31 (15.06 oz). Worst thing about that? It cut into & through the 20 DMA at G$309.04 (14.95 oz). DiG is working a megaphone or broadening top, and could rise as high as G$314.3 (15.22 oz) without breaking out of that megaphone.
Dow in Silver also punched into its 20 DMA, but less so. Closed up 1.59% to S$1,425.82 silver dollars (1,102.78 troy ounces) against the 20 DMA at S$1,422.02 (1,099.84 oz). DiS could rise over S$1,486.87 (1,150 oz) without breaking out of that megaphone.
I repeat, these are the indicators that tell us when stocks have peaked against silver & gold. And when stocks have peaked, silver & gold will have made their price lows.
The US dollar index, hamstringer of nations, crusher of hopes, economic vampire, scourge of the globe reversed yesterdays downward course and rose 72 basis points (0.81%) to 89.36, a new high. Behold! The dollar index hath formed a rising wedge formation, which usually ends with an earthward breakdown. Closed today at the upper boundary of that wedge. You can see the chart at http://scharts.co/105jV4J
That wedge implies the dollar is nearing the end of its upthrust, and should soon correct downward. This doesn't say anything about the dollar's performance next year, which the chart presently forecasts as much higher.
Does a higher dollar seal silver & gold's fate? Not necessarily. They can rise right along with the dollar if stocks are tanking and wallowing.
By the way, looking at a chart for the last three days, I simply would NEVER have expected the Dollar Index to rise. Looked like it was in the middle of an unfinished correction, but the Official Lies from the Labor Department today, the (un-)jobs report, goosed the dollar index higher. Yeah, buddy! That there's rational, ain't it?
The euro yesterday appeared ready to rally, but today gave up all yesterday's game and then some, posting a new low close for the move, $1.2288, down 0.74%. As the dollar hath formed a rising edge, so hath the euro formed a falling wedge, which genrally breaks out upward. So the dollar rising/euro falling game has just about played out.
Anybody still care about the yen? It dropped 1.42% to 82.31, and Abe is in a fight for his political life. He is likely to win on 14 December, which means the yen will sink like an iron anvil pushed overboard in the South China Sea.
Gold fell $17.40 (1.44%) to close Comex at $1,190.10. Silver lost 32.4 cents or 1.96% to 1619.6.
This looks and sounds rotten till looking closer you observe that neither closed below its 20 day moving average, so momentum remains upward. Yes, today disappointed me and looks rotten, but think back on silver's spectacular performance Monday. It was driven down to 1415c and rose back as high as 1681c, a 19% range on the low! I don't believe I have ever seen an exhibition of strength quite like that.
Nor did gold lag far behind. That day it ranged from $1,141.70 to $1,221.00, 7%, crashing resistance at $1,177.50, $1,205, and only skidding to a stop at $1,218.
All this, believe it or not, leaves an uptrend, however uninspiring. Since silver on that wild day exceeded the lowest price I could envision, 1465c, for the time being I am accepting that as the price low for the entire correction -- I mean the LAST one. But that doesn't mean silver & gold will take off from here, because after 3-1/2 years' damage, they have a lot of rebuilding to do.
So I think we've seen the lows, but silver & gold have to confirm that by throwing a leg over those levels where they broke down this fall, that is, $1,200 & 1860c.
Now that I think about it, metals' performance on Monday was the exact opposite of that crushing attack in April 2013. Mmmm.
On 5 December a.d. 771 Charlemagne became the sole King of the Franks after the death of his brother Carloman (they suffered a severe royal name shortage in those days and were forced to ration both vowels & consonants.)
Charlemagne would later revive the Roman Empire when he was crowned Holy Roman Emperor. It's one of those persevering oddities of history that the Franks who settled in France were really Germans. Then the present English ruling house since mid-18th century has been German, too, so they are the English-Germans. To make it worse, the German Kaiser Wilhelm II was Queen Victoria's nephew, making him a German-German Then in World War II the French Germans united with the English Germans to fight the German-Germans. That don't make a bit of sense.
Y'all enjoy your weekend!
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger