I am writing a newsletter today, but Laura (our editor) will be out of town on Thursday and Friday and I will not be publishing until the following Monday.
I sent my friend David R (who worked most of his career as a gold and silver fixing member) an email and said, “It looks like the market has turned up, what do you think?”
He wrote back, “Yes, gold looks good again with Europe and Italy back in focus.”
Austerity is turning into a four-letter word. Japan is hell bent on weakening the yen. They are still stuck in a deflationary spiral that began nearly 25 years ago. The Central Bank of Japan, with full government approval, will water down the yen until their inflation hits at least 2%.
The voters in Greece, Italy and France are absolutely not in favor of austerity. Something has to give – the euro? Or perhaps a mass exodus from the EU?
The Fed, as you can see from the above quote by Bernanke, is on a long-term policy of currency debasement, also known as QE (to infinity). The dollar, above 80 on the USDX, hurts our exports, or at least that is what business leaders think. The cure? Weaken the dollar, but it’s hard to do when other countries are doing the same thing at the same time. All the currencies are sinking at the same time so nothing much changes. The Fed will have to fight to keep the dollar from “rising” now – and so they shall. Truth be told, they would prefer a weaker dollar (to a point).
Meanwhile, gold notices what is going on, and if gold can stay above the important $1,600 level and silver can stay above $29, or better yet, $30, then the down draft is over. This could be the beginning of a very big and rapid recovery. As Ed Steer, Ted Butler and Bix Weir would say – it’s all up to JP Morgan now. They have the funds on the short-side of the gold and silver trade and they have moved a lot of their money to the long-side. A move up now, would make a lot of money for JP Morgan and that’s what they do – manipulate markets and make money in the process, all with the government’s blessing (and funding).
As you can see, gold has a lot of ground to make up. $1,650 would look awfully good! From there, $1,700 is within reach.
Remember, Sinclair promised that the “correction” would be in the rear-view mirror by March 29th. His prediction looks a lot better today than it did yesterday.