Buy The Dip & Buy The Rally
Though Wednesday's are typically down days, the charts suggest that you should keep an eye on things.
In the larger picture, nothing much has changed. The pullback, that began on 10/4 with the BLSBS report for September, concluded with the spec washout lows of 11/2, following the release of the October BLSBS. Both gold and silver retraced roughly 50% of their moves from mid-August and have rebalanced some of the spec long vs Cartel short positions.
So, where do we go from here? Both metals could simply continue to trade sideways for a while, in a tight range between 1705 and 1730 in gold and 31.60 and 32.60 in silver. Maybe they will? There is still hope, however, for a breakout. Though there are clearly well-defined caps on the charts, pressure continues to mount for the UPside breakout I've been expecting/hoping to see. My London contacts continue to report "robust" physical demand at each and every fix. Let's see if this doesn't soon bleed over into the paper markets.
The main fundamental story I'd like to emphasize today is this: http://www.zerohedge.com/news/2012-11-13/us-budget-deficit-soars-october-government-spends-over-300-billion-one-month. And here are the two charts that accompanied the story at ZH:
As Egon Spengler would say, "this is extraordinarily bad". The first chart shows total U.S. government spending for each October since the turn of the century. Note that the total spending outlay for 10/12 was nearly as high as the disastrous level seen during The Great Financial Crisis in 2008.
Next, look at the chart on the right. This chart shows the total monthly deficit for each October since 2000. Of course, deficit equals spending minus tax revenues. At $120,000,000,000, the shortfall/deficit for October 2012 is a remarkable 22% higher than October 2011. Since October is the first month of fiscal 2013 for the U.S. government, it is safe to assume that the total deficit for the fiscal year will greatly exceed the deficit for 2011, likely coming in somewhere between 1.3 and 1.5 TRILLION DOLLARS.
Again, let me ask you, from where will the funding of this shortfall come? The republocrats would have you believe that we are borrowing it from China. That's sounds cute and handy and it has an easy-to-understand, populist tone. The problem is, like most republocrat statements, it's not true. ( http://www.bloomberg.com/news/2012-09-11/china-s-u-s-debt-holdings-aren-t-threat-pentagon-says.html)
So, again, I ask you, from where will this money come? If you answered "QE∞", you're finally beginning to catch on. All of the nonsense, the SPIN and the BS that makes QE∞ out to be some type of "economic stimulus" program must be ignored. Quantitative Easing is simply a backdoor system by which The Fed directly funds the over-spending of the U.S. government. The Fed buys crapola off of the balance sheets of the Primary Dealers and these same dealers turn around and use these funds to support/buy treasuries at auction. The bond market continues to magically levitate, interest rates stay low and the U.S. government continues along its merry, Keynesian path.
Eventually, this will all come crashing down in an extraordinarily painful, inflationary collapse. Until then, because each new dollar printed is so destructive to the value of each and every existing dollar, you must continue to accumulate physical precious metal. Consistently exchanging your devaluing fiat for tangible, real assets is the only personal financial protection that you have against this madness.
Buy some more today.