Stage two: the Fitzpatrick numbers.

It might be useful to divide the developing situation into 3 stages.

Stage 1: the breakout of the precious metals. See recent posts.

Stage 2: The Fitzpatrick numbers.

Tom Fitzpatrick read the charts and predicted the following: a) if gold closes above 1,672 then it will rally to test 1,910.

b) if silver closes above 31.70 it will then test 33.

Today was a good day for the PMs and gold closed at 1,687.6 (above the Fitzpatrick number), but silver moved to 31.77 then sold beck down to 31.442. Still, it is close.

Most everyone believes that the PMs responded to Bernanke's speech at Jackson Hole, Wyoming. Bernanke hinted strongly (again) that the FED may ease if the numbers don't get better.

We have a busy schedule coming up, which I believe will set the stage for testing Larry's numbers. If that happens (and I believe it will) we will enter Stage 3.

Schedule of important events:
Sep 6, next week Thursday. ECB meeting. Expect bond purchase announcement.
Sep 7, Friday. US employment numbers.
Sep 13, FED monthly meeting. I believe the FED will announce more easing.
Sep 12, German Constitutional Court rules on legality of using German funds for bailouts.

China has already eased. Some Traders expect the ECB to purchase Portuguese and Spanish bonds. The Market expects the FED to ease. Bernanke is expected to be replaced by Romney (if he wins), so Bernanke has nothing to lose by easing now, i.e. between now and Sep 13.

Risks:
1. German Court ruling;
2. American fiscal cliff.
Here are the most recent graphs: