The beginning of the ened.

Monday, Larry's weekly update came out predicting the coming collapse of the Stock Market, gold going to 1,400 maybe 1,200 (in round numbers), silver to hit $22/oz and the Dollar exploding on the upside. Since then the Market kept going up, gold shot past 1,700, silver hit $33 and gold mining and silver mining stocks added at least 10%.

I was tempted yesterday to collect the data and show you how this is true, but today it seems obvious. The question is WHAT HAPPENED?

Tuesday the FED Committee met and yesterday they announced their intention. Unlike Larry thought, the FED is not going to wait untill the Stock Market collapses but intends to hold interest rates near zero through 2014 and they "did not rule out" FURTHER BOND PURCHASES (note the plural). QE here we go again. From Europe comes the news that holders of Greek bonds are not willing to take a 50% loss - a step which is irrelevany anyway, since Greece is not able to pay even that levekl of debt. Meanwhile, the Finance Ministers of Italy and Spain tell us that their countries are unwilling and unable to do the reduction of deficit as agreed to and demand that the ECB provide the funds to buy their bonds and stimulate the economies of European countries.

So the US Dollar began to plunge and is now flirting with 80 on the down side and gold has begun to rally. Gold and silver miners are gapping up today and the gold and silver bears are scrambling to cover their shorts. Tower Hill Mine (which has $400/share value of gold in the ground at GOLD=2000/oz) shotpast $5.5/share.

Let's put it this way: chances of Larry being right are rapidly diminishing.

Gold and silver moving.

I did not post about this. KWN is always talking about the coming shorts squeeze, so I kept quiet. What they report though is that the silver market is 20M oz short and that the silver was borrowed from SLV and sold. So, silver rocketed past 31 and is now over 32. There is serious backwardation for silver and Europeans are dumping the Euro as fast as they can. The Dollar had stopped rising, even as the Euro falls, and the CRIMEX has "compliance problems." Meaning that they can not deliver on paper contracts. Is this the early phase of the coming panic?

Slouching toward a small Armageddon

There are three brewing disasters developing simultaneously:

1. A possible war with Iran.
You see it coming. The US govt is trying to discourage Iran from building atomic bombs with sanctions. The sanctions aren't working. For one thing, the sanctions are being ignored by China and the Europeans and for another, the Ayatollahs do not care how much their economy is hurt. Iran is now enriching uranium to 20% and when they have enough, they will test a weapon. For the US, Iran having nukes is a nigthmare of proliferation, but for Israel, it is an existential question. The US has moved an anti-missile defence system into Israel, anticipating that Iran (like Saddam) will launch multiple rockets into Israel. Iran is threatening to close the Straight of Hormuz and when that happens, it's bombs away.

2. Europe marching toward financial calamity.
A possible Greek default is on again. What now? Remember the agreement negotiated between Angela Merkel (Chancellor of Germany) and French President Sarkozy? The Agreement was to have lowered Greek indebtedness by a "haircut" of European banks - meaning a partial default of Greek debt. Well, the banks decided not to take the deal.

The European Central Bank has digitized over 500B Euros into existence, but a Greek default will set off a chain reaction of defaults of banks that can be papered over only by further digitizing of Euros. The Euro has been falling, which has been driving up the US Dollar and keeping gold and silver in check. Following on the heels of this financial uncertainty, S&P downgraded half of the European states and put the rest of them on watch. This will put a further pressure on European economies by raising interest rates. In order to keep interests low, the ECB will digitize more Euros which will fuel inflation.

3. The coming of QEIII.
The Obama regime is cooking the books to give the impression that the economy is recovering. FED governors, on the other hand, admit that the US economy is soft and are now talking about QEIII. A third injection of paper money will drive up inflation. Gold and silver shorts will be squeezed and gold will quickly rise to $2000/oz. This will accelerate the rise of gold and commodity prices. Things could turn really ugly if cowardly Republicans block Obama's request for another Trillion dollars.

These are interesting times.

Developments in the world of finance.

The world proceeds as we expected. Europe is mired in ever more problems and default threatens Greece and Hungary. The Greeks are puttingup national companies owned by the government as collateral for bonds. I wonder if it will work. It's one thing to dell such enterprises for cash, it's another to put them up for collateral. Will investers bite - that's the question. Hungary is begging the IMF for a bail out while the IMF is trying to stop the FIDESZ govt of Hungary from amending the Constitution.

Meanwhile, gold and the Dollar have moved as forecast by Larry Edelson except: 1. gold bounced off from $1,450 and 2. it no longer runs opposite of the Dollar. As you can note, while the Dollar rose, so did gold. Now, gold is hovering around 1,600. Larry forecasts gold to fall and fall, but it does nor appear that ready. Except, that gold failed to close above its 200 day moving average producing what is known as "the kiss of death" formation. Bearish.

The forecast is for a black swan event between now and May and Larry's forecasts call for gold to bottom in February. The markets are not telling us much tonight. They simply continue as last week.