Gold and the financial underpinnings.

Do the Chinese want to dominate world finances, are they interested in setting the world's finances on sound ground or both? Some experts regard the Chinese opening of the Shanghai Gold Exchange (which does not allow paper sales without asset cover) and China setting the Gold Fix as steps in this direction.

The Western powers have issued so much debt that it can not be repaid. One possible way of doing away with this debt is inflation. That is not happening. Another possible way of reducing the effect of the debt is to devalue currencies and revalue the price of precious metals. Do you see where this is heading?

China and Russia have been buying gold and silver and so have some other central banks. Have they enough to dictate the revaluation of gold and thus restrain the Obama monster of spending and borrowing?

The word is out that China wants to increase the value of gold to between 10K and 20K US Dollars and then disclose their true gold holdings.

I have recorded the end of the gold bear market. Now I will report on the beginning of the bull market. In a gold bull market the price of silver often rises faster that the price of gold. This differentiation follows the original gold breakout. Let's see how these have worked out.

Note that the gold bear market ended in December and was followed by a quick rise to 1,285 or so. Silver had a different course:

Silver has lagged behind gold by nearly two weeks and then began to rally again in April. You can see the delay in silver breakout in how the two averages passed each other - silver lagged about two weeks.

Silver and gold mining stocks have acted different yet. Here is one of my favorite silver miner:

This stock has hit a low in mid January then broke out continued to rally in spite of the stabilization of silver prices. And here is another favorite:

GPL is a good mining stock and yet it was shorted down to over 42 cents. If you bought these shares in January, you would have quadrupled your money.

It is not only silver minors that are rallying, but gold miners as well.

The gold miners are running a bit behind the silver miners.

All this is telling us that investors expect gold and silver to go up. It is how people expect to survive the coming carnage in the financial world. Incidentally, a shallow wedge formed for this stock from February till April 10 before the spectacular breakout. More to come.