A Moment of Uncertainity.

The gyrations in the financial world yesterday reflect the gyrations in the political world. Simply put, the era of Socialism in Europe and the United States is ending, but not without financial chaos. How can I say that Socialism is ending? Because the most forceful proponents of Socialism (the Communist Parties of Russia and China) have given up on Socialism.

This does not mean that clean, unfettered Capitalism will be restored in Europe, because Europe may come uder the domination of Islamic Fascism (excuse the redundancy). We are, however, witnessing the death throes of European Socialism. How? By seeing the currencies of the Socialist countries unraveling. These countries and the United States have covered up the shortcomings of Socialim by printing currency and kiting checks via their central banks and other banks owing large sums to each other. In reality, the billions of dollars European banks owe to each other should be added to the bonds these countries have issued. In the US, the indebtedness is mostly in treasury bills: over $14T and counting.

Yesterday was the first time the Euro was shaken badly. There will come other days like yesterday. As the Euro shook, it drove the Dollar up, which in turn reduced the price of gold and silver. The graphs of gold and silver show that both gold and silver dove below their trading channel and gold dove under 1,520 briefly and silver under $35. Both of these are support points. This morning, the US Dollar is dropping but so are gold and silver in the overseas markets.

Gold and silver miners fell again yesterday (check XAU), but it seems to me that the miners will bottom out.

What prognastications can be made at this point? Uncommon Wisdom forecasts continued weakness in PMs based on the Summer weakness in gold and silver. Mr Sinclair forecasts a sudden Summer rally that will catch people by surprise. How could this come about? If the Greek bailout holds and is ratified by the Greek Parliament, then the Euro will be stabilized for the time being. But, now it will be the Dollar's turn. July 2 is approaching and that is the deadline given by Republicans to the Obama regime. Needless to say, the regime has no intention to stop its march to Socialism and cut spending other than for defense. The US has no authority to borrow any more money. The regime is trying to blackmail the Republicans by talking about defaulting on US obligations. And as the economy deteriorates, the FED can be counted on to continue its money printing. This will weaken the Dollar.

We live the Chinese curse: THESE ARE INTERESTING TIMES!