As The World Burns
Another week is off and running. What will it hold? Will we all still be here come Friday?
Seriously, I'm starting to wonder. Maybe I'm beginning to get immunized somewhat to all of this craziness but don't things seem a bit out of hand? Maybe the world has always been this crazy and I've just never really noticed before? Nah, I'm going with the former. This is madness.
Think back to...let's say...1999 or so. Everything was peachy. Almost all of the countries in world were getting along just fine. Oh sure, there was the occasional battle in the Kashmir and you had No-Fly-Zones in Iraq, but I don't recall checking the news with dread every time I opened a browser. Now you never know what might flare up next and the entire world seems on the edge of conflagration. Actually, in my gut, the world doesn't just seem on the edge, I know that it is on the edge and this is sure keeping me from ever getting a good night's sleep.
The latest craziness is this whole China v. Japan issue. While I have little doubt that it was purposefully begun as a a way to "distract" the Chinese and "dissuade" them from getting too forceful in the Middle East, it seems to have really touched some raw nerves in China. Have you seen much of this in the mainstream media? Me, neither. Perhaps because it is potentially another Obama Regime blunder of such epic proportions that the MSM would prefer to ignore it in the hopes that it will all simmer down in due time. We'll see but you definitely need to take the time to scroll all of the way through this ZH article. Look at all of the pictures and read all of the captions. http://www.zerohedge.com/news/postcards-furious-china. And here's a companion piece that was posted just a few minutes ago: http://www.zerohedge.com/news/japanese-businesses-shuttering-chinese-facilities-mainland-anger-spreads. And, for the coup de grace, try this one on for size: http://www.theaustralian.com.au/news/world/china-japan-heading-towards-war-says-us-defence-secretary-leon-panetta/story-e6frg6so-1226475484583
For now, of course, this is just a sideshow. The real action is in the MENA where everything points to imminent conflict. You've got this: http://www.telegraph.co.uk/news/worldnews/middleeast/iran/9545597/Armada-of-British-naval-power-massing-in-the-Gulf-as-Israel-prepares-an-Iran-strike.html and this http://www.bloomberg.com/news/2012-09-16/iran-revolutionary-guard-has-advisers-in-syria-lebanon.html. With this http://www.usatoday.com/news/world/story/2012/09/17/syrian-jets-hit-lebanese-territory-near-border/57794026/1 and this http://www.pbs.org/newshour/rundown/2012/09/navy-exercise.html. And, of course, there's all of this: http://www.zerohedge.com/news/full-summary-latest-anti-american-sentiment. I think I'll head out today and buy some more .40 ammo, just in case. It's kind of like physical metal...If you have to ask yourself if you have enough, you probably don't.
The metals are getting whacked around a bit this morning which is perfectly fine. Both gold and silver would appear to be temporarily "overbought" again and need some time to work of some of the recent excesses. As discussed last week, all significant dips must be bought as QE~ means price is moving inexorably higher.
And, after reading through the comments of my Saturday post, I feel as if I should clarify my remarks a little. First and foremost, I was/is/am very excited that The Cartels got caught wrong-footed last week. Everything shows that their intention was to smash price, just like they did on Leap Day. They were hoping for either some "disappointment" out of the German Constitutional Court on Wednesday or The Fed on Thursday. They got neither and, consequently, took it in the shorts (no pun intended). HAHAHA you arrogant jerks!
This is/was not intended though to give you the impression that it is a straight up rocket ride from here for the metals. It, most assuredly, won't be. There will be raids and corrections just like there always have been. This difference now is that every correction will be bought and bottoms will be quickly found. Can we still see brief 5-10% drops in silver and 3-5% drops in gold? Of course! The Cartels are trapped massively short and they will manipulate as much as they can in order to cover as much as possible. But in the end, they are screwed. The game has changed regardless of whether they want to see or admit it.
Prices will continue to advance in stages and this is why I encourage you to buy all dips. Not the intraday $10 kind of dip. I'm talking about the real, raid-type dips where gold falls $30 or $50. Physical demand is so high and supply is so tight (particularly in silver) that paper price dips can only be driven so far. Massive physical orders emerge and, unless The Cartels want to further exacerbate their supply issues, price must be allowed to rebound. You end up with a "stair" type pattern as seen on the charts above or a steady sloping pattern of higher highs and higher lows. Either way, gold and silver will undoubtedly continue higher and will likely do so at an increasing pace as The Cartels get increasingly desperate against their untenable position of underwater shorts and need-to-be-repaid leases.
You could even look at today's action as a microcosm of this. The short algos and The Cartels have tried to drop price enough to shake out some longs and relieve some pressure. They've tried this even in the face of a falling POSX. So far, they've failed miserably and now they are on the cusp of getting run the other way. If forced to cover the shorts they put on just today, price will quickly move toward 1780 and 34.
I leave you today with another gem of an article from Jim Quinn. Jim has been doing excellent work chronicling the real demise and destruction of middle-income America. This new article is very well done but really quite sad to read. http://www.theburningplatform.com/?p=40366.
I'll be keeping an eye on things and will post again if conditions warrant. In the meantime, I'm off to Cabela's.