I sat staring at the silver chart yesterday, wondering why it was saying it wanted to go higher. Today I found out: samurai central banker!
It seems the market expected Bank of Japan head criminal Kuroda to take interest rates further into negative-land. Instead, Kuroda left them unchanged. In the market's mind, this equaled an interest rate rise, meant the yen was not going to depreciate to toilet paper, and the dollar was not going to shoot the moon. Here's what it looked like: http://schrts.co/UuqBFa
Samurai central banking caught everyone by surprise. The Yen, which had fallen down out of a rising wedge and was playing footsie with its 50 day moving average, promising to fall mightily, shot back up inside the wedge, rising 3.03% in a market where daily moves are normally measured by nano-percentages.
The Euro didn't move much, up 03% to $1.1358, but the US dollar took it personally. Very personally. Look: http://schrts.co/OkJ5UT
US dollar fell 69 basis points (0.73%) to lodge at 93.68. That took it below the bottom border of the month long trading range and pretty well wrecked beyond repair the earlier break out from that (green) falling wedge. Last low was 93.62. Any close below that is liable to precipitate a free fall. Below 92.50 there is only -- AIR. Clouds. Not enough support for a hummingbird to perch on.
Let me be clear, speaking without forked tongue: US dollar is teetering on the lip of an escarpment whose bottom is a massive 13 points lower. Should the dollar fall off that lip, it will send silver, gold, & commodities soaring.
Stocks didn't like anything about today. In Japan, where the Nipponese version of Quantitative Easing has left the BoJ owning almost all Japanese government bonds, 40% of all stock ETFs, and untold other stocks, Kuroda's announcement that the BoJ would stop buying all that sent the Nikkei 225 down 3.61%.
In the US, Apple has fallen from 104.35 two days ago -- Mercy, 112.10 on 14 April! -- to 94.83 today, a modest 9.1% loss in two days. Carl Icahn fired tear gas into the panicked crowds when he disclosed he'd sold his Apple shares. That, combined with the rubber bullets out of Japan implying an end to free central bank money for speculation, spooked the mob into stampeding. Dow fell 210.79 (1.17%) to 17830.76. S&P500 plunged 19.34 (0.92%) to 2,075.81.
I can't remember where I heard it, but somebody said yesterday stocks were floating on borrowed time. Today their creditor came calling.
Oh, and just LOOK at that Dow in Silver! http://schrts.co/ohwLZP
'Tain't going any direction but down, and this leg now started will be a BIG one. DiS ended at 1,013.11 oz. Below all the moving averages, below the uptrend line from the 2011 low, below, below, below. When it breaks 991.46 (last low), why, a waterfall will become the Gulf Stream.
Dow in Gold is no slouch, either. http://schrts.co/8Sv0tc
Gold's lethargy compared to silver has slowed the DiG, but today its downward flight bumped into the uptrend from the 2011 low and the 50 DMA. Closed at 14.06 oz, down 2.79%, and will be cheaper tomorrow.
Silver leapt 26.7¢ (1.54%) to 1755.3¢ on Comex. Gold vaulted $16.3 (1.3%) to $1,265.5 Gold/Silver ratio fell today from grossly oversold to even-more-grossly-oversold, & stopped at 72.096.
I'll be switched. Much as indicators and time scream they ought to correct, silver & gold act like markets beginning to break out skyward. Of course, both have been tanked up with central bank rocket fuel, so that casts doubt.
Here's a gold chart, http://schrts.co/hLQF2d
Gold's MACD turned up today, as did the rate of change. It pulled away upwards from its intertwined 20 & 50 DMAs, and jumped BACK over the uptrend line from the January low. It did everything, in fact, except close above the last high ($1,272.40), & didn't miss that by much. If gold gets above $1,287.80, the March high, it'll be gone like a lean hog in a ripe cornfield, and you'll never get it back.
At its 1769¢ high, silver was exactly three cents off its last high at 1772¢. It is straining at the leash, ready to run. http://schrts.co/zsmR7J
It's also as overbought as antimacassars at an old ladies' convention. Can it go higher? Yes, but it is surely bucking expectation.
Bottom line: Today is either one monstrous trap for gold and silver bulls and both markets are going to turn and burn tomorrow, OR both are fixing to break out to new rallies that will see 1850 and $1,350 before June closes her pretty doors.
But whether that rally comes tomorrow or next week, 'tis coming SOON.
MISTAKE: Yesterday's commentary contained -- I know this'll astonish y'all's dentures right out of your mouths -- a mistake. Dennis Hastert was not sentenced to 15 years in prison but 15 months. Y'all are so picky. I was only off by a factor of twelve.
Y'ALL ARE GOING TO LOVE THIS! Here's how the Italians solved their banking crisis, and thumbed their nose at Mario Draghi & the ECB. Italian banks have 360 billion euros in bad loans, most in Europe, but here's the solution. All the banks contribute 5 billion euros to a bailout fund called "Atlas" (get it? Bears the weight of the banks on his shoulders.) The bailout fund will buy new stock issued by the troubled banks, AND will buy loans from troubled banks.
Now this is exceptionally bad math, even for bankers. The bailout fund is exactly 1/72 of the bad loans. This ain't even smoke and mirrors, its just smoke, from a little bitty match. POOF!
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger