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As long-time readers know, I do not trade gold and silver based on short-term trends. I identify a long-term bull market and “ride the bull,” which is not easy to do.

I believe that the biggest dis-service a newsletter writer can do is to scare you with predictions of an eminent fall in the price of gold and silver. The biggest offenders are the “Chartists” and “Technical Analysis” group. One of the most visible from this camp is Larry Edelson, at Uncommon Wisdom. He did correctly warn of the fall from $1,900 but those taking his advice are still waiting for the bottom, he is still predicting, which he warns will find gold sinking to $1,405 and silver to $19 or $20.

Just last Monday, he was on the air broadcasting that “these up-moves are corrective in nature and no doubt the next big move is down.” He proudly pointed to his charts and says there is strong resistance at $1,680 and $1,726.70 and he is convinced that gold would not penetrate these levels.

The silver action, he said, looks terrible and silver will not breach $32. The downside for silver, he continued, was the $20 level or lower.

As of 9:17 a.m. on Thursday, I hate to tell you, but Larry’s dire warnings are looking – well, shall we say embarrassing. Gold is currently $1,726.70 and rising and silver is $33.59 and up another one percent from the close on Wednesday.

What Larry has managed to do is to keep investors on the sidelines, shaking in fear, since gold bottomed momentarily at $1,531 and silver at $26.11. And if you are one of the dear souls who listen to Larry, you are still sitting on the sidelines, paralyzed in fear. You have already missed the rise in gold of over $196 (12.8%) and the rise in silver of $7.48 (28.6%). And worse, some of you probably still believe in Larry’s charts and are not even considering jumping back in.   Well, maybe when gold tops $1,800 and silver clears $35 Larry will come around and say, “It caught me by surprise, and honestly, I never expected this to happen.” Fair enough, but at what cost to his readers?

He still hasn’t figured out that the markets ARE MANIPULATED, and his charts aren’t working. That is why it is SO DANGEROUS to sell out and sit on the sidelines because some “Technical Analysis” guru tells you to, when all you have to do is tough out the pullbacks and stay in the game. That is not to say that things will be smooth-sailing from here on. To the contrary, the gold and silver market will be a bumpy ride with many more ups and downs. My point is, don’t let someone scare you out of your positions. All of these guys are trying to sell you their paid-for subscriptions and turn you into “traders.” This is a very dangerous thing to do. They will show you how to trade yourself right out of the gold and silver bull market. Hold tight as the big moves are yet to come and even Larry is bullish by the last half of this year. As our friends at GATA say: You Gotta Be In It To Win It.

Looking at the 6-month gold chart, you can see that the $1,750 level is the next strong resistance point. Then $1,800. Gold is above its 200-day and 50-day moving average, so many hedge funds will be coming back on the long side of the Comex market.

There must have been a LOT of short covering today, for gold to break its bonds of “never more than a 2% gain in any given day.” Gold is up 2.62% at the moment and that is all but unheard of.   The high-low swing in gold today was $66. Sinclair said that swings of $100 a day would become common. That is yet to come, but we are getting closer and closer. This is not a market to short or trade except for the most experienced of our readers. It is a time to buy the dips and hold on tight as the crazy “bull” tries to throw you off.

Tomorrow is the February option expiry day, and that almost always means that the bullion banks will smack down the price so the options they sold will drop out of the money and they get to keep the premiums paid for the options without having to pay out any money. It is no surprise gold has been under pressure the past two trading sessions. What irks me is why no one in the mainstream gold world ever questions the tendency for gold to fall a fair amount around an option expiry. Right on cue, the price of gold was taken down around $20 starting at the usual “attack time,” 3:00 a.m. New York time. But then a strange thing happened. Gold unexpectedly exploded up more than $60 on the news that the Fed was holding interest rates at zero until at least 2014. QE3, welcome! Even though it has not been (yet) announced, there is no question any longer, if there ever was any, that it will be and dollar debasement is a certainty. The unusual rise in the price of gold signals what the folks over at Casey Research called “the end of the petrodollar” in yesterday’s daily. The dollar is now caught in a vise between further monetization and the willingness of other countries to conduct business in non-dollar currencies, and yes, even gold.

We are no longer talking about small meaningless economies like Venezuela or North Korea. The dollar is being quietly set aside in countries such as Russia, China, India, and others. When these countries start conducting business, especially in oil, in currencies other than the dollar, they are very unlikely to accumulate excess dollars to purchase US Treasuries with. This is the environment whereby countries would logically sell US Treasuries.

So here we are, at the very time our government needs to sell more bonds, as our annual deficit expands by more than $1 trillion a year, only to find the marketplace is less willing to buy our bonds. What then, you ask? The Fed is, after all, the buyer of last resort and they will buy any unsold Treasuries and enough of them to hold interest rates at zero. Lot’s of luck, I say!!

This is the recipe for inflation, serious inflation. There is a lot of talk about “deflation” and true enough, many asset classes, including real estate, are losing value, but this misses the point. The inflation we are about to experience is not based on increased demand or a strong economy, neither of which we now have. It will be based on DOLLAR DEBASEMENT, which is exactly what will happen as the Fed continues its futile and ill-advised policy of zero interest rates and quantitative easing.

In the 80s and 90s I was pretty close with Ken Coleman who wrote an excellent newsletter called The Fed Tracker. It was Ken’s contention that the most important thing to do if you wanted an “edge” on how to invest, was to watch closely and determine what the Fed was about to do. Well, we don’t have to guess any longer. They had told us what they intend to do. They will buy bonds, and worthless assets from the banks, funding them so they can buy the bonds, and the dollar will suffer and gold will continue to amaze with its move up.

The gold market has yet to enter its third and final phase in this 11-year old bull market. It is on the threshold. My guess is once gold tops $2,000 – $2,200, the media will finally “discover” gold and investors who have sat on the sidelines all the way up, will finally decide it’s time to buy gold. There will be shortages. There will be delays. There will be a lot of money made by those who already own physical gold. It’s coming. The Fed, today, told us so and the market reacted!

Taking a casual look at the exchange rates, the dollar was down and the euro was up, but so were the Australian Dollar, the Canadian Dollar and the Swiss Franc. The US dollar’s fall was not strictly a euro-event. Gold was up in every major currency in the world. Day after day, gold is re-asserting itself as the safest form of money and more desirable than any paper fiat alternative. Central banks are accumulating gold. Iran and India will trade oil for gold. The world is changing right before your eyes, if only you look at the events – you’ll find them all right here in our daily.

Here is a chart, courtesy of Australia’s Nick Laird, that shows all currencies are falling vs. gold – i.e. gold is rising against all currencies. All I can do is think of the title of one of my all-time rock songs, by the Marshal Tucker Band, “Can’t you see!” And I say to you, dear readers, “Can’t you see?!” I know it is small print, but the charts are, from left to right, top to bottom, gold priced in Australian Dollars, British Pounds, Canadian Dollars, Chinese Renminbi, Euro, Indian Rupee, Japanese Yen, South African Rand and Swiss Franc.