The pulse of the world.

EUROPE is coming out of a nasty and protracted recession. QII growth in Europe was 0.3%, which is nothing spectacular, but better than shrinkage. True, Europe's banks are in bad shape, but it is not European money that is responsible for the rally in gold. Europe needs to write off $3T and if not done soon, the sum will increase. Liabilities of European banks are estimated as $30T, 6x GDP.

WAR fears are mounting world wide.

1. Egypt is heading for a civil war.

2. Israel must be close to unloading on Iran as Iranians are getting ready to start up 7000 more centrifuges, among them some new ones that are faster. Right now the centrifuges are concentrated in two areas, but if Iran acquires enough uranium for a half dozen bombs, that capability will be dispersed.

3. Syria continues with its civil war.

4. Japan, Taiwan and the Philippines have decided to build aircraft carriers to counter China's aggressive stand.

US economy uncertain. The Market anticipates a tapering to begin in September, where the FED will reduce its stimulus by $10-20B monthly. The Market responded and 10 year Treasuries had an interest rate hike from 1.4% to 2.8%. And gold took off.

PMs rally.

Silver miners lead the rally.

Larry still says that gold will hit between 1050 and 1110 before the rally is ON. He is correct to say that a bear market reversal requires a low to be tested. But, this is where ha makes his mistake. Gold had a double bottom in July and HE IGNORES THIS. Otherwise he was correct that the PM market would turn around in QII.

Let's sum up where Larry was wrong:

1. The gold market WAS being manipulated.

2. Gold and silver have broken out of their bear markets.

3. Stocks he selected for avoiding are doing fine.

Larry says he will change his mind if Silver closes above 23.73 on Friday and gold above 1445. Silver closed at 23.32 last Friday so its close. I expect a short pullback in silver, but it should resume its rally later this week.