Financial Stress Continues.

Weiss Research claims that its ratings are more accurate that Fitch, Moody and the rest. And Western Countries do not fare well, as indicated by the top graph. The US continues to run a monthly deficit of about 40% (graph two). What is more critical is that we are about a month away from bumping up against the latest debt ceiling.

Debt-related events are still driving financial news. Weiss's list of problem banks indicates that US and European banks are nearly insolvent. Opening the Dollar Window to European banks had staved off insolvency for now, but Greeks have pretty much emptied their banks. That means that the Greek economy can not recover and must again be bailed out and soon.

The convergence of these two events(reaching the debt ceiling and threatened default in Europe) are expected to raise gold prices, as it did last time (lowest graph). Gold and silver prices are still consolidating, but we are beginning to see higher lows. For example, during this current slide in gold prices, gold fell to 1,700, instead of the 1,680 support level. PM miners have been in a consolidation phase for a year and their breakout is now suggested. Yamada's reading of the financial bones (technicals) suggests a continuation of the consolidation, while Larry predicts gold to hit a low in February. Trends are converging.