Sunday pre-game 12/4

I do not know if it will happen in gold or silver first, but the price management schemes that have been in place for a few decades now in the metals markets are reaching a tipping point ... The hyper-inflation of financial paper is happening quietly and off the books. The growth rate in derivatives held by the Banks is mind boggling Jesse's Cafe Americain

A mathematician once told me that Andrew Wiles' proof of Fermat's theorem was so complex and labyrinthine that maybe 10 people in the world could completely understand it. I think the same goes for the shadow world of banking, with its derivatives and structured financial vehicles and such. Of course, you don't have to understand how something works to know what it does. And that the goal of this mountain of OTC derivative paper that has transmogrified into something grotesque is ultimately theft should be obvious to anyone with the courage & desire to see things as they really are.

Does it not seem that every day unveils more and more evidence that a criminal overclass has commandeered civilization for its own base aggrandizement? Like the wasp that lays its eggs into a caterpillar, causing it to behave erratically and even absurdly, we witness all around us our once proud civilization faltering in terminal decline, being eaten from within by the maggot spawn of these parasitic wasps.

And like the drunk who looks for his car keys near the street lamp not because that's where he dropped it, but because that's where the light is, most market commentators are too afraid of this dark reality to probe into it, using instead their energy to pretend the world around them is essentially sweetness and light, always ready to find rationalizations for the plentiful examples of malfeasance in front of their noses, always eager to present them as isolated incidents or exaggerated misinterpretations, always quick to sneer and flout at the more skeptical viewpoints, in effect serving the criminal overclass as the most useful of idiots (to borrow a thought from Lenin).

Let's quickly start with gold and concentrate more today on silver.

We're at 1748. This could be a decisive week, what with L'il Timmy Jeethner meeting in France, Spain, Italy, and Germany on Tuesday and Wednesday, then the Euro summit Thursday and Friday. Don't be surprised if there's some perception management bullshit pertaining to Europe (e.g. to set the stage for money printing) or some genuine deflationary scare (e.g. as reckless brinksmanship immediately before the money printing), or even some geopolitical bullshit (yup, these venal clowns are taking us to war again). Where's our support? Starting at $1735 (the 89-day MA which held during the June correction, and generally demarcates the minor corrections from major), we go down in increments of $5, to the 20 and 40 day EMA's ($1730, $1725 respectively), after which we'd approach the 50 day MA at $1700 with super strong support at the 144 (pink, below) at $1665 and eventually at the 200 (yellow) $1605.

Turning to silver, the daily chart of closing prices that I posted last week turned out to be very important, as the bears did not allow silver to close above the grey dotted line:

Here's the other daily chart form last week, where we see that we're running out of time to break out of the wedge. It appeared like that was happening on Friday morning, but the rally was emphatically pushed back down in what appeared to be a premeditated strike (see my post below). This chart also shows us that the $31.5 level is important this week:

Looking at the two long term charts (with slightly different trend line slopes) we see how stubbornly silver refuses to fall out of the blue channel; we don't want to fall too far below $32.

Note also on the chart below how we're squeezing closer to the point where the purple dotted line will meet the red dotted line. Both the red and purple lines have been support/resistance repeatedly since the September crash.

Finally, a quick look at the CCI. Look what happened the last time the 200 day MA (blue) crossed the 233 MA on its way down (see light blue vertical line). Could that presage another breakout? Stay tuned. Less speculatively, the two red/green horizontal lines denote a very important buffer zone between the two peaks of 2008. Strong resistance/support there, I'd say, and something to keep an eye on.