Gold in euros

Gold in euros is at a potentially critical point.

It's right at the bottom of its trend channel, and testing an important horizontal line of support. (The trend lines have the slope of the regression line through all these data points.)

If this level can't hold, that would be very bearish.

But, it's hard to see anyone being bullish on the euro now compared to gold. So, gold in euros might be a good gamble this week.

Big Week for Silver

Just a quick follow up on the silver charts I presented recently.
It's looking like we're at a point which in hindsight will be seen as very important. The lower blue trend line was broken today, and we're right at the 34-week MA (pink line). I'd bet that if silver falls any lower, and/or doesn't finish the week over the blue trend line, with the 34-wk MA holding as support, then silver is in for a somewhat protracted decline, at least until it hits the 55-wk MA (green) and/or lower dotted trend line.

Ever the optimist, I bought a shit ton of SLV at 32.85 today, with stop in place. I'm not confident, truth be told, so I didn't go in for options or leverage as I hinted at last week. I also bought a kilogram kookaburra and a silver lunar monkey. Hell, silver can drop to zero and I don't care - not looking to sell these things anyway. The Perth mint does it right!

Washington and Wall Street’s Incestuous Corruption - Martin Armstrong

In a spectacular account of investigative journalism rare in this day and age, Gretchen Morgenson reveals her talent to hunt down the truth. Unlike most books that have merely sensationalized the collapse, Gretchen has exposed the much deeper corruption that lays BEHIND THE CURTAIN linking Washington and Wall Street like you have only suspected
before. Those who try to attack every negative account of the Investment Bankers as Conspiracy Nuts have been following the advice of Cicero. When you can’t address the subject, attack the speaker. Anyone who has dared to discuss the links between the New York Investment Bankers and Washington have been cast aside as Conspiracy Theories. The question now is, HOW MANY CO-INCIDENTS DOES IT TAKE TO MAKE A CONSPIRACY? Gretchen has exposed not just the usual account of how many people from Goldman Sachs have infiltrated government around the world, but how Goldman Sachs has also provided employment for government kingpins. If you ever wondered why no New York Investment Banker is ever criminally prosecuted, this book exposes the political links that protect them. J.P. Morgan and Goldman Sachs can be civilly prosecuted and fined for the very same acts that companies like ENRON, WORLDCOM, GALLEON, ARTHUR ANDERSON, DREXEL BURNHAM, REFCO, and numerous other firms were utterly destroyed for claims of fraud all because the government has discretion as to who it will prosecute criminally and civilly, meaning there is no black and white Rule of Law.
Whenever an economic crisis develops, everyone looks for the obvious culprit to blame and it is always just about the money. Consequently, with hindsight, any near meltdown of America’s financial system can be argued to have
enriched a few at the expense of the rest of the people. Who’s responsible? Congress holds its hearings but the vast majority are lawyers. The ONE CARDINAL RULE of any good lawyer is NEVER ASK A QUESTION YOU DO NOT KNOW WHAT THE ANSWER WILL BE! SO if you think that a hearing is really a high profile investigation, go back to watching the heavy weight wrestling matches
where reality is in the eye of the beholder. She exposes James Johnson who was the head of Fannie Mae, set up the whole mortgage bubble, and then quit in 1998 to become a board member of Goldman Sachs. And
gue ss what! Barney Frank, author of the financial reform that will hurt everyone BUT the main culprits, asked Johnson to hire his family members as a favor. Oh ya! Let us not forget that it was James Johnson who helped Obama raise money for his campaign. And you thought there could be anything done without an undisclosed conflict of interest? Right!
The recent report of the Financial Crisis Inquiry Commission blamed of course all the usual suspects — Wall Street banks, the mortgage
giants Fannie Mae and Freddie Mac, subprime lenders, and financial regulators. Nobody will ever have to answer for anything. Naturally, they put on a good show as if it were the latest cast of characters in a new version of that times play:
Gretchen has done what a real investigation should have done. She focused in her “Reckless Endangerment” concentrating on particular individuals who played key roles who Congress never once mentioned. The reason why becomes all too obvious. For Congress understands the American people. YOU CAN FOOL MOST OF THE PEOPLE MOST OF THE TIME proving Abraham Lincoln was dead wrong. Congress, brought to you by the friendly New York Investment Banker, knows that there will be a fuss. But within days it will blow over and by election time, everyone will have forgotten. Prosecute the fringe and make noise sentencing them to prison for decades and you won’t have to prosecute the real culprits. To satisfy the outcry, they will just charge them civilly and fine them less than 1% of the transactions claimed to have been the fraud. As reported by the Wall Street Journal on June 22, 2o11, J.P. Morgan agreed to be fined $153.6 million for fraud.
This month alone, on June 17th, 2011, it was reported that the usual culprits Goldman Sachs and J.P. Morgan were the subject of an investigation in London for rigging the warehouses there to store metal. On June 14th, 2011, the front page of the London Financial Times reported that Goldman Sachs paid an internship of the brother of an official at a Libyan fund. Bribes of this nature are a criminal act for everyone else. Let’s face it. The New York crowd can do whatever they like, for beside Death and Taxes, they can be certain that no matter what, they will NEVER be criminally prosecuted for anything at any time. They can’t even be really sued in New York for they own the courts.
Gretchen Morgenson co-authored the book with Joshua Rosner, an expert on housing finance. They keenly trace the beginnings of the collapse to the mid-1990s, when it was the Clinton administration calling for a partnership between the private sector and Fannie and Freddie to encourage home buying. The mortgage agencies’ government backing was critical providing the implied AAA subsidy, which was used by Fannie’s head James A. Johnson to expand the business to accomplish the political increase in home ownership. A 1996 study by the Congressional Budget Office found that Fannie kept nearly a third of the subsidy rather than passing it on to homeowners. Throughout Johnson’s more than nine years running Fannie, he personally took home roughly $100 million. His successor, Franklin D. Raines, has kept up the tradition.
Gretchen points out that under Johnson and Raines, Fannie clearly maintained its distinguished and privileged position by handing out a portion of its profits directly to members of Congress through campaign contributions. Additionally, they provided employment positions for relatives and former staff members. The name of the game in Washington is to do fake studies where you are told in advance what the outcome is supposed to be. Fannie also paid academics for the same scheme doing research that concluded the benefits of its activities while never addressing the risks. Fannie also organized a host of groups to lobby on its behalf. Gretchen and Rosner offered detailed accounts of how Lawrence Summers, then Deputy Treasury Secretary, buried a department report recommending that Fannie and Freddie should be privatized. A few years later, Fannie hired Kenneth Starr who was the special prosecutor in the
Whitewater affair, who then intimidated a member of Congress who was asking how much the company was paying its top executives.
The picture painted by Gretchen calls to mind Organized Crime. Fannie’s top executives were above the law and underwrote as many loans as possible enriching themselves and their co-conspirators. They effectively made Countrywide Financial as big as it was since it was the single largest provider of home loans for Fannie and the nation’s largest mortgage lender! Of course, Countrywide abandoned all lending standards and wrote as much junk as possible knowing they would be bundled. This was all linked hand-in-hand with the New York Investment Bankers who were slicing and dicing everything into packages of securities and then convinced AIG to insure their mess.
Gretchen and Rosen have demonstrated how the revolving door between Wall Street and Washington has created an incestuous relationship of absolute immunity. They are in bed with the decision makers as to who gets prosecuted or not. Former Chairman of Goldman Sachs became the Treasury secretary, Robert Rubin, who pushed for repeal of the Glass-Steagall Act that had separated commercial banking from investment banking as well as insurance. Rubin eliminated all the Great Depression reforms and enabled the crisis to take place. After accomplishing his goal to get rid of the restraints, he then became Citigroup’s vice chairman, and Gretchen wrote “over the following decade pocketed more than $100,000,000 as the bank sank deeper and deeper into a risky morass of its own design.”
The incestuous relationships forming a tight web of personal relationships as well, have tied Goldman Sachs, Citigroup, the New York Fed, the Federal Reserve, Fannie, and the Treasury making fools out of the press and the people of the United States. Of course, just in time for the Crash of 2007-2009, Hank Paulson, former Chairman of Goldman Sachs, assumed the role at Treasury ensuring no one would be prosecuted. In 1996, Fannie had even hired Stephen Friedman, another former chairman of Goldman Sachs, to its own board. Then, in 1999, Jim Johnson left Fannie and joined Goldman’s board. It would of course be Hank Paulson who as Treasury Secretary under Bush not only protected Goldman Sachs by bailing out AIG letting Goldman’s hated rivals collapse increasing the market-share for Goldman Sachs, but then orchestrated the taxpayer bailout of Fannie Mae and Freddie Mac. Naturally, he created TARP to bailout Goldman, Citigroup, and AIG.
Gretchen makes it clear that these key players simply got away with it. The American taxpayers have not just picked up the bill; these guys have sent the nation into massive inflation that is being masked by the collapse. This inflation is the depreciation of the purchasing power of the dollar wiping out the savings of the elderly and destroying the pension funds of the Baby-Boomers. These people are effectively loading up the submarines with cash and are headed overseas just like the Nazi’s did when they knew the end was near.
Not only is there no Rule of Law, one would have to be insane to even have accounts in New York after this type of conduct. They own Congress, the White House, the Courts, the Justice Department, everything. They pulled of the greatest takeover of government in the entire history of civilization. As Gretchen wrote: “The failure to hold central figures accountable for their actions sets a dangerous precedent.” Why would anyone do business in the United States? This is becoming like some corrupt third world country. Gretchen has got it right: “A system where perpetrators of such a crime are allowed to slip quietly from the scene is just plain wrong.”
This entire affair has made fools out the press that only regurgitate whatever the government says, offer little to no independent verification of anything they say, and in the end, have become merely a propaganda machine for the real criminals. This clearly shows that those who constantly criticize anyone who dares to point out this incestuous relationship as CONSPIRACY NUTS, are either sublime fools, or more likely shills who are paid one way or another to create disinformation.
The worst is yet to come. Now, they are slashing all the benefits you paid for your entire life. Like a bait-and-switch conman, they took taxes on the pretense you would get something in return, and now when you get close, they just pass laws and revoke everything you paid for all these years. They call it socialism when it comes to the people. When it comes to paying the good-old boys, it is not even discussed and when it is, the picture is painted that if they do NOT bail them out again, the world will end. Perhaps it’s just the political world of easy flowing money.
One day the American people will stop being fools. But for now, not only is a fool easily parted from his money, but they have proven you can fool most of the people most of the time.

To Chemo or not Chemo. Alternative Cancer (scientific) treatment.

The testimonial below is from someone I know through my cousin.
What she has to say is pretty important if you know someone with Cancer.
She was given a death sentence years ago and her options were Chemo and die in months anyway or try and find another route. Both her parents are Medical Doctors BTW. She is not cured as she is riddled with Cancer but what she has is an active and extended life years beyond what anyone would have expected. For others with less aggressive or advanced Cancer there are better results.

"I am sending this email because so many people have asked me about Immunepheresis, the treatment in Germany that has kept me alive against the odds in spite of a terminal metastatic cancer diagnosis. Please forward it to anyone you know in case it helps someone who has cancer to explore an additional medical treatment option.

I have been toying with the idea of becoming visible as an advocate for this treatment, after all, I am not the doctor in charge, and I am not able to speak for the medical side of things, but because of the way I feel, the happiness I'm experiencing, the 'extra time' that I know I have recieved, the physical strength, the power to be still here engaged with raising my kids, being with friends and family and doing my work in the world, I am compelled to share my story, and if it extends even one persons life, it will have been worth it. 

My clear intention in writing this is to be of service to humanity by being living proof that Immunepheresis works. And the more who know about it (like dialysis in the 50's before it went mainstream) the more can avail of it. I would love to see it available as an option under my medical insurance and part of what's on offer in hospitals locally. Some American patients attending the clinic have had the costs reimbursed by their insurance companies so it is heading in the right direction.

Imagine knowing, despite a cancer diagnosis, that you were not necessarily done for. That you could change your mind, open your heart, and engage in a medical treatment that uses the power of your own immune system to seek out and kill cancer cells wherever they are in your body? This is my experience of this metastatic cancer: a manageable health condition, not an immediate death sentence.

Right now as I write, coming into the summer of 2011, I am feeling healthy and well. I have a few aches and pains, but they are in the background. This is in stark contrast to the very poor prognosis I faced in december 2008 when I was told of the extent of my metastatic breast cancer. I sincerely doubt that I would be still here physically had I not had the option of Immunepheresis treatment, and I am very grateful that I and my family came to know about it when we did. It was just in time.

Here's how I started off. After the metastatic diagnosis I was exploring options, researching treatments and the efficacy of all the known modalities on my type of cancer. One of my Doctors told me that chemo wasn't known to cure bone metasteses and while we could use radiation for pain, it didn't cure the cancer. I'd done chemotherapy in 2002/3 and it was very tough. I wasn't interested in using up the rest of my life in chemo induced sickness when it was known to be ineffectual. The chance of achieving my current outcome was nil using conventional options. I kept searching, prepared to choose no treatment and to play out my life without subjecting my body to a chemical assault if something better than chemo didn't show up. I found out about Dr Lentz's treatment from a few sources simultaneously in a series of synchronistic events. My family, who include doctors and scientists, researched it and we decided to go with it.

There is a new website about Innumepheresis which was not there when I was first diagnosed and treated: It describes the treatment protocol and methodology in detail.

The first three treatment cycles were 12 tx days spread over three weeks with a break of about 10 days in-between. We measured results with CT scans. They showed clearly that the treatment was working. Currently, I typically go over there for a 5 day maintenence treatment around every 2 months. I have come such a long way since my original diagnosis; the tumors that were seen in my liver, lungs, omentum, hip, sacrum and thoracic spine have shrunk (lung, liver), disappeared (omentum), and in the case of the bony 'litic' lesions (which made a hole rather than a growth), are healing over with the type of sclerotic new bone that you'd see in a CT scan of a healed break or fracture. All in all I feel great and feel that while I continue to do this treatment, I will stay alive and be able to enjoy life fully between cycles.

Over two years have passed from that terminal diagnosis. I and my doctors in Ireland have noticed some important things: I am very much alive (contrary to all expectations), pain is minimal (again, contrary to all expectations) and joy is maximal. Life is stretching out in front of me, a gift: the present! The tumor burden has diminished considerably and as this cancer is immunoresponsive, should continue to regress while I continue to recieve the treatment at intervals of about 2 months.

The bottom line for me is this: I felt I wouldn't survive chemo again with it's inherrent challenge to the immune system and I am glad I risked trying Immunepheresis because I am most definitely surviving it! I feel now that I am living with cancer rather than dying from it, managing it as a chronic condition, slowly but surely shrinking tumors and healing bones. Dr Lentz is continuously working in his research lab for that next step: after shrinking it to nothing, to find the "off button" so it does not return. I am holding the vision for that. Staying alive for long enough.

If you feel that any of this story would inspire or help someone researching treatment options, please forward this email to them. Anyone is welcome to get in touch with me anytime for a patient's perspective. Please put immunepheresis in the subject if you're emailing or adding me as a skype contact so that you don't go to my spam bin. Thanks.

Of course the best person to call about Immunepheresis is Dr Lentz himself, so I include the clinic contact details below. Dr Lentz operates Praxis Lentz with his wife Dr Kiran Lentz and a highly trained nursing and support staff. Everyone at the clinic speaks fluent english.

Tel.: +49 8051 968482
Fax: +49 8051 968448
The more who know about this treatment the better I think. Please give others the information, let them add it to their options. It may come just at the right time for them too!
In addition to my physical treatment, those who know me will be aware that I use tools from a course that I teach called The Avatar Course. I continue to study and practise this material every day and am managing this creation of cancer in my life with gratitude, appreciation and love for the insights that it brings, and a fearlessness that I would be glad to share if anyone is interested. Just ask.

I sign off now, with much love and many good wishes for your continued health and happiness. I trust that you will be in touch if I can help!

QE or not QE, that is the question

I've been looking for a good entry point to make another aggressive play in the PMs since the May gold correction and silver collapse. It's been about 8 weeks. Given the rising commodity prices and the bad rap QE2 got, there was an idea going around (Marc Faber, for one) that the Fed would dramatically announce an end to QE3, leading to a 2008-like collapse of the stock (and commodities) markets, giving them an excuse to print more money. After Bernanke's talk today, that's looking less likely to me now. The path of least resistance is the one you bet on, and my guess is that they're going to keep flooding the system with liquidity while trying to implement a slow, managed rise in commodity prices by whatever means at their disposal.

For one thing, the chart of the CRB Commodities Index does not appear to be poised for a 2008-type collapse. Keep in mind, for 5 years, from September 2001 until September 2006, the CRB rose at a steady rate of 17% (orange lines), at the end of which, it stood 10% higher than where it's at now (see upper red/green horizontal line). It then corrected for ~6 months before beginning a truly hyperbolic ascent that led to the 2008 collapse.

In the only 2.5 years since the bottom of that collapse, the CRB has been rising steadily at 23% (bright green lines), and its 200-day moving average (purple) is currently where it was in May 2006 (see lower red/green horizontal line). So, I find it hard to believe that TPTB would intentionally risk the chaos of a market crash at this point, including a further decline in housing, to "control" an inflation that they don't feel compelled to concede even exists, as of yet.

On the other hand, the CCI Commodity Index, which weighs oil prices much less, is about 5% over its 2008 peak. Note that, unlike the CRB, this index went up steadily for about 7 years (2001-2008) without a serious correction, before the 2008 collapse. Interestingly, using the "Raff Regression Tool," you see that the slope of the trend since the collapse (blue lines) has not changed at all from the slope before the collapse (grey lines). It's as if the entire graph was simply shifted down, to continue its ascent. I could see it moving up all the way to the top blue line again before people really get alarmed.

Also, note that the orange 233-day moving average (we use Fibonacci numbers here at Screwtape - we're sophisticated like that) appears to be a very strong basis of support for almost a decade. Well, that moving average is right around the level of the 2008 peak that proved to be resistance last November (see red/green horizontal line). If the CCI falls another 5% to that point, that to me would be a bullish signal for re-entry.

On the other hand, I wouldn't be surprised at a breakout from here. For one thing, the mining stocks have woken up. In poker terms, I think we've been dealt a Q-10 or K-9 right now. I'm going to see how things play out this week, and wait at least until options expiration Monday to go back in aggressively.

Is the Euro Doomed? By Martin Armstrong

Answering Your Questions
Unfortunately – YES! There simply is no long-term planning. Politicians have no expertise in the field of economics. They certainly would never run their own personal finances
as they do that of the state.
The so called rescue package is shoving deflation upon Greece to such an extent, they are begging for civil unrest if not revolution. This same brain- dead idea of imposing such draconian economic reality upon a nation that led to the rise of Adolf Hitler. We forget that John Maynard Keynes himself wrote perhaps his most prophetic work
published in 1919. Keynes made a plea to the common sense of the politicians. But they refused to listen then as they will refuse to listen now. That refusal to listen then produced the
rise of Adolf Hitler and World War II. He made a passionate pleas for reason, but nobody would listen:

"I cannot leave this subject as though its just treatment wholly depended either on our own pledges or on economic facts. The policy of reducing Germany to servitude for a generation, of degrading the lives of millions of human beings, and of depriving a whole nation of happiness should be abhorrent and detestable,--abhorrent and detestable, even if it were possible, even if it enriched ourselves, even if it did not sow the decay of the whole civilised life of Europe."

The politicians forced servitude upon Germany and it got the same unreasonable response in return. Europe is making that same mistake again. They cling to old theories, refuse to listen, and above all, will set the stage for perhaps the worst economic impact they can possibly create. The failure to have created a single debt to match a single currency revalued the debt of the weaker economies at the highest possible level reducing the economic prospect for growth. This is Germany all over again!

Shanghai Low?

Here's a chart of the Shanghai Stock Exchange Composite Index (^SSEC). In the background (green), I charted 1/$USD, i.e. the inverse of the dollar index as a measure of dollar weakness. Notice how closely related these two indexes are, for several years now. Strength in the ^SSEC is closely tied to weakness in the dollar, and vice versa. Neither is a function of the other, since sometimes the dollar leads (red circle), while other times the ^SSEC predicts future events in the dollar (blue circle). But changes generally do not happen simultaneously.

Now, look at the ratio between the ^SSEC and the dollar ($USD). Like so many other dollar-related charts, this one is at a critical point right in time for QE3. We're at an important trend line (the base of an ascending triangle), and the RSI is under 30, which would signal the dollar is due to fall and/or the ^SSEC to rally. We'll find out soon enough.

Lies, conditioning and corruption

Zerohedge is still the main vein for all things Financial.
Unfortunately, sometimes the way they present the news borders on hyperbole if not simply outright lies.
Consider this one as a prime example;
If anyone cares to look a little deeper into the headline you will see it's that decided that they weren't going to allow the small time guy to play in the 100:1 plus markets where there is no chance for delivery in the underlying product. This is due to their interpretation of the Dodd-Frank rules.
The only way you can still play these markets with this extreme leverage with is to have some significant net worth.  Simply put don't have the metal to settle (hence the change per Dodd-Frank) and when you play there you are betting against not the comex or anything else. Simply put this is much ado about nothing.

The other story that caught my attention was from Zerohedge again. Some poor bastard decided he had enough and to protest he set himself on fire. It was interesting to read what the man had to say;
His main theme is there are two sets of law books and he is correct. Whatever his failings as a Father or as a human being he has some very relevant points.  There are two sets of laws and anyone who is on the receiving end of the second set of books is going to be pretty confused as it has no bearing on what you see on TV. Simply put the second set is based on policy and procedure written by some nameless public servant.
He missed one important fact when it comes to Child Protection Services. He hinted at some of their methods. Their first tool is to corner a parent and threaten them with losing their kids if they don't turn the other parent in. Of course this can backfire on the first parent as they can then say allowing or knowing of some crime makes you party to or just as an unfit parent as the perpetrator of the "crime".
These are the tools of the Khmer Rouge, Nazi and every other crazy regime you can think of. Turn citizen against citizen, Brother against Brother, Wife against Husband.
The second tool is if even if the first tool doesn't work they will try and get you to sign up with some sort of program whereby they can visit the child on a weekly schedule.  What they don't tell you is once they are in your life you can never get them out. Once you sign that document you have opened up Pandora's box and they can call anyone in your life. This probably reads as more Hyperbole but it's reality unfortunately. 
They CAN take your kids if they can play one parent against another or even recruit one of the other kids on a flight of fantasy. They CAN take your kids if you are stupid enough to sign one of their plans that allows them access to your kids. Once they are in your life they can reappear at any time if you allow them.
You may think this can't happen to you or there is no smoke without fire. If that is what you think then your thinking has been conditioned to think authority figures have our best interests at heart. You are thinking why on earth would Child Protection Services take kids out of good homes?
Follow the money. For every kid they take out of a home and place in foster care or for permanent adoption they get a budget increase. In essence there is a 100K bounty on every kids head.  Don't take my word for it look it up. Research and verify the information for yourself. Verify that these people have limited education and even less experience. Verify that like most in the business of trying to peer into others heads they are broken Human beings themselves.
If you ever find yourself in the position of having to defend yourself against these people be very careful. Sign nothing. Get a Lawyer. Tell them you are recording every conversation. Document everything. If you can't afford a Lawyer then sometimes the only option if you have tried to be reasonable is to politely tell them to get out. My telling them to politely "Fuck Off" probably only worked because they had nothing and I could afford a Lawyer.
Yes, I am talking from experience and after 2 weeks of being polite and paying Lawyers etc. I researched and understood the game then I told them to get out. I understood that they were jumped up nobodies who make terrible decisions and leave kids in horrible situations while chasing down phantoms.
If you are wondering what my crime was to get their attention in the first place I would tell you it really doesn't matter as even the perception of a crime is enough for these people. If I told you what it was you would think I am a liar or making it up so I will simply say google "CPS scam", "Child protection services hell" etc etc.
The govt employee is not there to protect your interests or serve the greater good but to feed on you and your fellow taxpayers.

Silver 2003 - ????

I mentioned in my last post that I've been fitting a regression line to data points, then using its slope to create trend lines and channels. However, has something called a "Raff regression tool" which creates regression lines using some other criteria than just minimizing distances of squares from the line, since the tool clearly seems to overvalue minimum and maximum points. So, I have two slightly different trend channels for you, both of which seem informative.

Chart #1

The blue trend channel captures silver's steady rate of growth from the time it passed $5/oz for good, in 2003, until 2008, when it collapsed. We then see silver try unsuccessfully to get back into the blue channel last November/December, before finally breaking through in February 2011, when it quickly hit the top blue line. Then, in an instant, silver fell in May to the bottom of the channel.

From the perspective of this chart, silver bulls only have cause to worry if that lower blue line is broken. It hasn't been broken yet, but it's currently being tested. If it continues as support, I could easily see silver making a move to the uppermost dotted grey line (~$75/oz) this winter. If the lower blue line is broken, however, it could very well wallow between the lower grey dotted lines for several months.

Chart #2

An alternate perspective. According to this chart (made using the Raff regression tool), silver could fall all the way to $30 in the weeks ahead, and still remain in the blue long-term trend channel.

Chart #3 (weekly)

The weekly silver chart, the trend channels of which resemble Chart #1's closely, might provide the most potential information of all. We see here the same pattern: a primary blue channel capturing a very long term trend, broken to the downside in 2008, re-entered in 2011, and now being tested. Here, though, I've added two informative moving averages. I tried fibonacci numbers (as 144 works for gold), and the 34-week (pink dotted) and 55-week (green) MAs seem significant since 2009.

The 34-week MA has been an effective lower bound since 2009; silver has bounced off of it 3 times, and is approaching it again right now. It has been broken on one occasion (Feb 2010), when silver quickly bounced off the the 55-week MA.

Note, when the 34-week and the 55-week MAs crossed paths in July 2009, silver hit both of them simultaneously.

Interestingly, in two or three weeks, it's looking like silver may test the 34-week MA and the lower blue line of the trend channel at the same time. That will be something to look out for.

Also, keep in mind that many relatively low prices currently averaged into the 55-week MA (i.e. from last summer) are dropping out, meaning it will start climbing faster than the 34-week MA. So, if the blue trend channel and 34-week MA are broken in the weeks ahead, the 55-day might very well be a very strong base of support, when it should be near 30.

Gold in Dixie Dollars

A ratio you never see is the price of gold vs. the dollar index. Probably because the price of gold itself is thought to represent dollar strength (or weakness), so by dividing the price of gold by the dollar index, you'd appear to just be amplifying any up and down movements in the price of gold. Moreover, the natural ratio of gold nuggets to baskets of foreign currency in the earth's crust is, as of yet, unknown.

On the other hand, gold is far from a perfect proxy for dollar strength. For example, lately, the dollar has been rallying vs. other currencies, but gold has been holding its own. If someone were to tell you that gold will soon be at $2000, but the dollar index will be back at 100 (e.g. because of a Euro collapse), then holding dollars and holding gold would be equally profitable (+33%). So, the decision to trade in your federal reserve notes for gold should be based (to some extent) on the ratio between the predicted performance of the two.

Well, look no further. Let's start with silver, because it makes for a more compelling long term chart. One way I've begun to read charts is by first drawing a regression line to fit long-term data, and then creating new lines with the same slope to look for significant-appearing boundary points. That approach seems less subjective to me, for if we draw channels and trend lines based solely on local maxima and minima, we may be over-valuing outliers. Moreover, if you believe that the PM markets are pervasively manipulated, as I do (to quote Jim Rickards: "they don't consider it manipulation, they consider it their job"), then a regression line will capture overall market trends in a way robust to short-term hijinx.

Using this approach with silver, we appear to be at an important crossroads. On the 8 year chart below, we see that the $SILVER:$USD ratio bounced off the blue line twice before breaking support in 2008; it then took 2+ years to get back to the blue line, wherein it became resistance (Nov, Dec, & Jan 2011). The ratio then finally cracked through in February of this year, and bounced off once (during the May massacre). Now, it's right about there again. I'm currently triple long dollars (UUPT) and double long gold (DGP). If we break through the blue line, I'd say it's time to sell silver and gold, and buy dollars. And vice versa, if the blue line proves again to be support.

The $GOLD:$USD ratio is at a similar crossroads. Unlike silver, this ratio doesn't exhibit any steady long term trend. However, the three-year chart is an obvious rising wedge, cleared in April. The top line has been support once (May massacre), and it's back there again. Note I have included Bollinger bands instead of standard envelopes to account for the increased volatility owing to covariation of gold and dollar strength (15 day, 2 sigma parameters capture all the points quite nicely). Note that we are also right at the lower Bollinger band, which in the past has been a bullish sign for gold.

So, let's see what happens over the next few days.

*I feel compelled to inform our readers globally (as Eric "Leading the Witness" King might say) that my market musings are merely those of a dude thinking out loud, who's basically waiting for online poker to become legal again so he can return to his preferred method of gambling. In that spirit, please draw your own conclusions, and thanks in advance for sharing them with me.

The value of the value of a bond, Part 2

It's been a month since I posted a chart showing the 10 yr treasury yield measured in ounces of silver. To summarize: a steady, decade-long downward trend (black trend channel) became notably sharper in 2010 (purple trend channel).

The price action appears consistent with my predictions from a month ago: looks like we're seeing a sharp zig-zag movement towards the upper purple trend line, on course to happen sometime this summer. So, I'm betting silver will trend downwards, or sideways, for another month or two. If this ratio hits the upper purple line, that's when I'll anticipate silver's next leg up.


The 144-day moving average of gold, as discussed in the comments of an earlier post, appears to be significant: it's been the lower bound for the price of gold since early 2009. Incidentally, contrary to what I thought, the number 144 isn't quite random - it's a Fibonacci number.

Many have noticed how many times the price of gold has bounced off of its 144-day MA over the past few years (see blue dotted line on chart below). But, what's also remarkable is how linearly the moving average has increased since it began its upward trend in mid-February 2009. (Linear on a logarithmic chart, reflecting growth at 27% a year.)

I fit a regression line to the price of gold since early 2009 (not shown). The slope of that line has remained almost constant for years, and importantly, appears to have the exact same slope as that of the regression line of the 144-day MA (see brown line on chart below). Also note the grey dotted lines, representing ~1.25% in either direction of the 144-day MA's regression line: it's never gone beyond that.

This steady rate of increase of the moving average seems a little too perfect for me. Remember, this has been going on since gold was in the low $800's. It fits perfectly with what Bill Murphy of GATA has called a "managed retreat" by the banking cartel, and what Jim Rickards has explained is the government's wish with respect to gold: they want it to increase in price (i.e. they want the dollar to lose value) -- as long as it happens in a controlled manner.

Obviously, this trend won't go on forever. But what if it goes on for the rest of the year? Let's assume that the 144-day MA will indeed continue to trace the brown regression line on the chart above (or oscillate between the dotted grey lines, at any rate). We can then get a good prediction of the actual price of gold on any given day. That's because, with every passing day, we know which number will drop out of the 144-day moving average (e.g. tomorrow, gold's price on November 12, 2010 -- $1388.50 -- will drop out). Therefore, if the average is to continue increasing at 27%, we also know how much the gold price has to rise.

The x-axis of the chart below represents days since February 12, 2009. The y-axis marks the value of the above chart's brown regression line. If the 144-day MA continues its 27% rate of increase, then it should hit $1600 around November 21, 2011. If that's going to happen, then the price of gold has to average $1620 until then. If we imagine, for simplicity, that the price of gold increases at a linear rate forward from here, then it would have to go up about $1.40 a day, and reach $1700 on November 21, 2011, for the 144-day MA to be at $1600 on that date. It can of course fall $50 today and still end up averaging $1620 a day by November 21, but the more it falls in the short term, the higher than $1700 it would have to be by November 21 for the condition to hold.

Golden Arches

I sure ain't one of them hi-falutin tradin fellers y'all should look to for advice, but this here looks like one of them fancy pennants I've heard so much about.
Gold in Swiss Francs

Actually, it appears to have a cup and handle in place of a flag pole. But good enough for me.

The sideways movement of gold measured in Swiss francs obviously reflects the franc's growing strength vs. other currencies over the past year or so. Peter Schiff (and others) believe this is a sign the Swiss franc is replacing the dollar as a safe haven. I'm not so sure, though, that this isn't just a short- or intermediate term trend. Fact is, these are all fiat currencies we're talking about. None are backed by gold, but the US dollar is at least psychologically (and potentially more than psychologically) backed by the US military. Who needs gold when you have daisy cutters. All those unfunded liabilities and stuff we hear so much about, well, they'll probably just never be paid when push comes to shove; until then, we'll surely watch the median standard of living here slowly decline. But, something tells me the US military will survive any economic eventuality just fine. Probably come out stronger, when all is said and done.

But that's just depressing. So, let's try to find some other way to tell if the Swiss franc is presently overvalued: by using that infallible economic indicator, the Big Mac index. Let's say I buy a Big Mac at JFK airport on my way to London. When I get to Heathrow, I sell it (properly refrigerated during the flight of course) for X pounds to a Londoner (who's unwilling to pay more than the market price). Well, that should set the exchange rate between the currencies. If I can sell the Big Mac for a profit (i.e. sell it for X pounds, then convert the X pounds into more dollars than I paid for it) then the dollar is undervalued relative to the pound. And vice versa.

Using that criterion, it's amazing to see how seemingly overvalued European currencies are, especially Swiss and Scandinavian ones. If I go into a McDonalds in Norway with a Big Mac I bought in America, pretend I work there, and sell it to a Norwegian ("Sold to you, sucka" as Kid Dynamite might say), I can convert my kroner back into dollars and buy 2 Big Macs when I get home, plus maybe even a little something from the evil Mickey D's dollar menu.

Below is a the % profit I'd make in various countries (blue bars) via Big Mac arbitrage. I also adjusted for the Gini coefficient, which measures income inequality in the nation, as a way to account for the fact that some nations have poor underclasses that are more willing to work for dirt cheap (red bars). When I do this, the Swiss franc seems the most overvalued of all.

Maybe that's why McDonald's is hiring?

Two gold charts

I looked at the price of gold since March 6, 2009, that fateful day when the Dow fell to 6400, and heretofore the low point of the recession from which we can't seem to recover.

Rather than draw trend lines, I decided to look for natural boundaries, such as moving averages. Data dredging, if you will.

The 145-day moving average, which, granted, you never hear about, nonetheless seems significant. Gold has not yet gone below it. Rather, it has bounced off of it emphatically 4 times (and just missed it another 3 times) in the last 2 1/4 years. If gold were at its 145-day moving average right now, it would be at $1419.89. We're pretty far from there, which is encouraging. Looks like, even if gold were to have a $100 decline this summer, you shouldn't panic, but rather back up the truck.
What about upper bounds? Over the past 2 1/4 years, the upper 5% envelope of its 20 day exponential moving average has been almost perfect. It's bounced off of it too many times to count. Gold would have to be at $1592.36 today to touch it, at which point shorting would probably a really good idea.

Next, I wanted to look at a monthly chart of gold for the duration of its latest secular bull, the beginning of which I deemed the month gold broke $300 for good. Looks like we're quickly approaching the vertex of a rising wedge that began in 2008. Technically, that's bearish, or so I've read. But bullish or bearish, whichever direction it turns, it certainly looks to me like this summer will mark a violent entry into a new phase.

* Update: Those of you with nothing to do may be interested in my revised interpretation of the monthly chart.

In the new chart below, I've drawn a red dotted line, which has been long term resistance for gold, and I see no reason why that should change. Gold touched the red dotted line in 2003, then not again until summer 2006. Looks like a similar thing may be going on 2008 --> summer 2011. The 1.5 year RSI is over 70 again, and if the pattern repeats, looks like it will approach 80 in the coming months, before a serious correction.

I've also drawn a new rising wedge, with this in mind: in March 2008, gold tested the red dotted line, then closed the month down about 7.5% If we start the blue trend line from that point, we see that the wedge was broken to the upside in April. Rising wedges are supposed to be bearish, but then I think that's in an overall bear market.

Trinity B, RIP

“Trinity B” has become rather infamous of late, posting prescient calls on a number of websites, whilst talking down some rather sacred cows in the PM community such as hyperinflation, silver shortages, and so on. She was discussed in the same breath as WB (may peace be upon her) by some, and flamed as a troll by others.

Earlier this week, Louis said we would publish some articles regarding the wisdom of taking investment advice from anonymous sources. What is the motivation of every person posting a story, opinion, stock tip, etc., etc.? Our stated goals at the Screwtape Files are to examine all the available evidence, assess it, and draw rational conclusions based on it. “Trinity B” was articulate, semi-plausible, and seemingly keen to promote a message. Most importantly, she was gathering attention in the PM community. We made contact, and we probed. We even managed to persuade Trinity to write a test article for publication so that we could assess the merits of her story.

This article, which we have decided not to share for various reasons of legality and personal confidence, essentially sought to explain the origins of WB and certain other silver price optimists. It was well written, credible, and compelling. It was also pure invention, as Trinity has herself now admitted to us. As Louis and other astute commentators here suspected, her calls were lucky guesses, based on charts. Trinity herself decided to stop the process before it became too serious. She wrote a sincere and heartfelt apology to us and – too embarrassed to post herself – has asked us to convey her regrets to her followers. She will not be posting again, nor replying to anyone who talks about her on blogs.

So, another myth is dispelled. We live in an age when blogs are a (non-silver) dime a dozen, and commentators are even more so. Is it right to listen to all points of view? Yes. Is it right to consider the possibility that insiders might want to leak information? Absolutely. But the more a point of view confirms our own ideas and hopes, the more strictly should we engage our skepticism.

Gold, DSK and a conspiracy theorist’s wet dream

By way of an introduction, I’ve been kindly asked by the guys at the Screwtape Files to post a few articles on some of the information and disinformation that, in my view, pervades every precious metals website. Whilst chewing my pen and wondering where to start, along came this glorious article in the EU Times. Dear reader, how could I resist such provocation?

Louis wasn’t wrong when he said we’d need to 'adjust our antennae to way out there'.

The CIA! The Russian Prime Minister! The IMF! The Chinese! Fort Knox! Wealth, power and sex! Influential men, secret plots, and a smear campaign so vivid in its concoction that no-one who knows the truth would ever again dare challenge the powers that be. Even the X-files never had so many clichéd elements in one story - all we’re missing is the obligatory car chase at the end.

Thusly, the latest buzz in Goldsilverland has started doing the rounds of all the blogs and chatrooms and I think it needs a decent de-bunking before the story gets legs. So get a coffee, print yourself off a copy of the article, and let’s go through it step by step:

- First, the EU Times itself. This is not a European site – its focus is largely on either North American issues or European issues that affect North America. Look at today’s headlines and compare them with those in le Monde, the Guardian or El Pais. The five leading stories in the EU Times(Aspartame, Canada free speech, CIA officer, Irish tap water, and moon water) do not, in fact, appear in any major European newspaper today. This lack of correlation is striking for what purports to be a purveyor of European news, even if it likes to revel in being outside of the MSM. This need not surprise us too much, however: The ‘EU Times’ is registered in Toronto, Canada.

- It is not a genuine news site, either. Major events are ignored at the expense of a few themes which are repeated over and over again: Jews in high places, gold vs the US dollar, CIA conspiracies, food scares, survivalism, etc. How many news sites do you know which have an ‘interracial’ section under ‘Crime’? Or a ‘Zionism’ section under politics, for that matter? The EU Times is, by any objective measure, a far-right propaganda site dressed up as news.

- Those who registered it seem rather coy about their origins, it seems. No address, email, phone number or any other way of writing to the editor if one wishes to address points raised in the articles. That’s pretty unique for a ‘news’ site. Further, it is an anonymously registered site. Compare this to any genuine news site, where registration information is given freely, as are contact details.

- OK, the story itself. The EU Times’ source is the UK ‘Daily Mail’ (although the story actually appeared in the New York Post a few days earlier). British Screwtape fans will know all about this erstwhile publication but, for the benefit of others, it is a right-wing tabloid daily newspaper with a strong anti-immigration, anti ‘nanny state’ and anti-welfare agenda. Much of its output is rather thinly disguised homophobia, racism and scare-mongering, and it is the butt of many a joke in the UK. It is, however, a real newspaper, started in 1896. Back in the 1930s it was a strong supporter of the British fascists, and ran the memorable headline, “hurrah for the Blackshirts”. But I digress.

- Regardless of the wisdom of using the Daily Mail as a source for anything, let us compare the two claims about what Putin said. The DM says simply (and probably correctly) that Putin said, “it’s hard for me to evaluate the hidden political motives but I cannot believe that it looks the way it was initially introduced. It doesn’t sit right in my head.” That's it. No mention of the FSB or secret reports. A search of the Kremlin’s website in English reveals no hits at all for ‘Dominique Strauss-Kahn’, and nothing relevant for ‘IMF’. I don’t read Cyrillic, so can’t check the Russian version, but it seems strange that comments meant to be seen internationally would appear on the Russian language site only.

- This should not surprise us. The FSB does not post its reports on websites any more than the CIA posts on the White House website or MI6 on the British Prime Minister’s. If Putin posted anything at all to the Kremlin website before suddenly thinking better of it and removing it, then it was clearly just the quote that appeared in the Daily Mail. The EU Times has apparently fabricated the story of an FSB report.

- Let us assume for a foolish second that this conspiracy was real. Then, the last people on earth that would know about US ‘plans’ to capture DSK would be the French DGSE. The US cannot afford to have bad relations with a strategic ally as important as France, and the DGSE would necessarily have to be totally out of the loop. Likewise, the 'rogue' elements of the CIA is a simply laughable concept, and the product of a mind that has seen too many fifth-rate spy series.

- DSK left behind one of his cell phones. He had others which he did not forget, although this is not noted in the EU Times article. So he could have been ‘tracked’ in any case. The mundane reality is that, outside of movies, it takes time, court orders, and senior sign-off to track a cell phone, and this would never have been a viable option for New York police seeking someone that aimed to leave the country a matter of hours after the alleged crime. DSK’s phone was not tracked – he told the hotel staff that he was at the airport, and this has been widely reported in the international press and by DSK's own defence team.

- The article then merges other, actually irrelevant stories into its fabric. So we have Ron Paul giving an unsubstantiated comment about the existence or otherwise of gold in Fort Knox. This is apparently backed up by a link to a report, which is itself striking for its complete lack of sources to back up its allegations. Save for a few references to a ‘Chinese investigation’, there is absolutely nothing on which anyone could make an independent attempt to verify or refute the claims. One must always regard wholly unsourced claims with a cynical eye.

To sum up, what we have is an article constructed around a single, vague quote from Putin mentioned in a story in a British right-wing tabloid. Added to this (probably real) quote is the pure fabrication of a mythical FSB report, and the invention of a collusion between rogue elements of the CIA and the DGSE. Then the favoured ‘gold’ theme gets stitched in, à propos of nothing, which is itself backed by an unsourced story elsewhere on the web. Chuck in a few quotes from a Congressman who has high standing in parts of the precious metals community, and bingo! – you have a wonderful article guaranteed to get linked to and posted all around the PM blogs.

Easy when you know how.