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“I have not sold any gold, I have bought more gold. If gold goes down I'll buy more. The price of gold is going to go much, much higher over the next decade.”
Jimmy Rogers
I suspect that the capping on gold and silver will continue into the month end tomorrow, and quite likely into some resolution of the debt ceiling discussions which will probably occur next week. They might not, and that will indeed be interesting. The Mad Hatter and his Merry Pranksters think that a 'little default' might be a good thing to make the country more malleable to their non-negotiable demands.
On a deal, the first impulse will be for stocks to rally sharply and the metals get beaten, in the usual 'risk on' trade. However, depending on the resolution of the debt ceiling, when people think of it after they have had their jollies in the first reaction, they may realize that absolutely nothing has really been fixed. The US financial system will still be corrupt and broken, and the politicians have openly stopped caring about the voting public and their opinions, in their desire to put on the corporate feedbag.
Speaking of broken systems, I am featuring worthless currencies on the sidebar this week. And one I am highlighting below, the famous US Continental Dollar, and a chart showing how it was devalued in comparison to silver, until it was finally withdrawn in 1781. Roughly two zeros were knocked off it.
I was discussing this with a friend and they said, 'Well of course, but these currency failures are the result of unfunded war debts. It is not the same in the US now.'
It's not? The US debt crisis is directly attributable to unpaid war debts, both class war and military conflicts in the famous global war on terror and on the middle class. They'll never learn.
Bon voyage, Bucky.
The early gains fall apart, as Wall Street grows increasingly 'nervy' over the House Republicans increasinly awkward looking actions on the debt ceiling. They are bending over backwards to impress a minority element in their Party.
No I am not talking about the Tea Party. I am talking about the big money corporatists, who write the politicians' pay checks. The Tea Party are hapless tools and cannon fodder for these folks, but they just don't realize it yet.
You cannot have a recovery until your reform the financial system. The white collar criminal class does not know how to say 'enough.' Their greed is obsessive - compulsive, not rational.
I had to chuckle a little today as the corporate spokesmodels on Bloomberg were reviewing the day's trade, and noted the slump in gold with the VIX spiking and stocks slumping, as out of character. 'Duh, what's up with that?' was the most insightful comment of the day.
So, we have had round one of the post option expiry 'gut check' which I had suggested would occur. It was a little more intense than the chart might suggest, because ordinarily gold would have been rallying hard up to the 1650 level on a day like today. But that was not in the cards as dealt from the bottom of the deck.
So what next? I think gold and silver will consolidate and chop around until the deficit discussion is resolved, one way or the other. And I am still in a very defensive position against a correction because we have come far and fast, and the Wall Street wiseguys just do not have the goods to cover their bets, so they have to continue running their bluffs.
La Douleur back-kissed the key trendline it had just broken, so no strong clue there yet. It still is in a position to rally short term and retake the upper end of the trend. A lot of this depends on short term policy decisions in the States.
But in the long run, paper will deteriorate, because it has nowhere else to go. The end game for the eggheads is a worldwide central bank setting fiscal policy and dictating values under the direction of a few senior pigmen. I don't think they will get it, or at least just yet.
"State-sponsored [financial] terrorism is the systematic use of [economic] violence to create a general climate of fear in a population and thereby to bring about particular political objectives. It is employed by governments, or more often by extremist factions within governments, against that government’s citizens, against factions within the government, or against foreign governments or groups.”
Encyclopaedia Britannica
Wall Street was strapping on its dynamite duds today, preparating to bring a little more pressure to bear on the deficit reduction talks. Give us what we want or we will a) crash the economy b) move our jobs to the Cayman Islands c) stop contributing enormous sums to fund political campaigns d) all of the above.
And the major players are in intense meetings with the principals, from both the financial demimonde (ratings agencies) and the political swamps (congressman on payroll), getting briefed on what will actually happen so they can maximize their returns.
Just another day in the 'hood with the hoods.
What you see is not what you get.
