Last week gold and silver had to withstand the usual bullion bank assault that occurs during option expiration on the Comex. The largest concentration of open strikes was at $1,700 for gold and $32 for silver. Although they managed to knock gold below $1,700 for a brief period, it closed on Friday at $1,711.10 and silver held at $32.09. There are only three settlement days left in October and we expect resistance at $1,725.
Technically speaking, gold has formed a “teacup with handle” formation and that is a very bullish formation. We are now in the process of developing the “handle” and the next major move should be up. The last time we had this particular formation was in 2008 and gold shot up dramatically from that point forward.
There is much written about the destructive monetary policies of the Federal Reserve and their policy of QE to Infinity. But how many of you know that the issues we face today were predicted long ago by famed Austrian economist Ludwig von Mises (1881-1973)? I was first introduced to Mises in 1984, by my employer at the time – and mentor, Jim Cook. There are several newsletter writers, including Doug Casey, Mark Skousen and Peter Schiff who are ardent followers of Mises.
Things really started to fall apart when the academic community in the US fully embraced the teachings of John Maynard Keynes. At least the “print money when the economy lags,” portion. Where we went astray was in not reigning in the money creation after the recovery. So we have lived in a world of constant money growth, well beyond the growth of the economy, since President Roosevelt’s administration. It really escalated under the stewardship of Alan Greenspan and Ben Bernanke. We are about to pay the piper.
Austrian economists were near universally ignored by the ivory tower academics and the media and there was not one major university that taught a course embracing their views. What are the views of von Mises and the Austrians? How do they apply to our current problems?
In his most recent book, National Bankruptcy: Why The Middle Class is Doomed, Jim Cook wrote the following essay on Ludwig von Mises. If you want to understand why our fiscal policies have led us to the brink of destruction and why neither Presidential candidate offers any hopeful solution, read the book.