BillHolter.com

Bill’s Commentary:

The precious metals complex had a pretty good run since early March. Gold, silver, and the miners got quite overbought and deserved to relax and digest those gains, which is what we’ve seen the past 2-3 weeks. For many years now, metals bulls have repeatedly asked “when”? It looks to me like “when” is NOW! I believe this coming week may be the most interesting week we have seen in many many years. I have pasted 3 charts, gold, silver and the HUI mining index. Before you tell me that because the metals complex is so rigged that charts are meaningless, please be patient. Something has definitely changed. That change is what we believed all along, that the physical markets would overwhelm the paper markets. This is, and has, been happening with China a huge buyer of physical gold and India the same with silver. There are now premiums on the SGE over and above COMEX and LBMA which has led to arbitrage moving physical metal from West to East and definitely tightening available supply for the paper traders to use to satisfy deliveries.

This first chart is gold which moved to all time highs. You will see a roughly 33% move up since last October, and close to a 20% move since late February. The move since February saw some serious overbought readings which you would expect to see with a move of this magnitude. If you look at the bottom of the chart, you will see the MACD (moving average convergence/divergence). This indicator can be quite useful leading up to a breakout or a breakdown. In this case, it looks to me like another push higher to further new highs is imminent. You will see a “hook” turning up, it has not crossed over yet but very close indeed!

Here we have silver. Silver has been JP Morgan’s beaten up and battered red headed stepchild. The silver market is maybe only 1/10th the size of gold, so obviously it is much easier to “manage” or manipulate. Since late February it’s had a nearly 40% move. Just as gold, it is no longer overbought but a little further advanced on the MACD “hook”. In fact, it closed Friday minutely crossing over to positive. The setup tells me that the coming week (maybe two) will be extremely telling of the future direction and do so in a huge way. “They” (the cabal) must either slam the metals complex here and now to abort the chart patterns, or suffer the consequence of a full on (and more importantly GLOBAL) “bank run” out of dollars/US Treasuries and into gold/silver/miners. $30+ silver looks like it could be only a day or a few days away. This will green light a very quick move to the $50 level where another battle will be fought …unless of course if a failure to deliver occurs, then all bets are off and the sky (floor for fiats) is the limit. I have been on the record for years that the entire fiat experiment would end in a failure to deliver physical metal. We may see this in very short order!

Lastly we have the beaten up HUI index. Same as silver, no longer overbought and the MACD infinitesimally crossed over higher on Friday. A picture perfect set up if you ask me, not severely overbought and within spitting distance of a breakout!

In conclusion, it looks like this week could be super exciting for those who have held “real money” for so many arduous years. Please remember, gold and silver do not “go up or down”, they are merely a mirror image of fiat. The real way to say the above is, this may be the week where the collapse of fiat is seen in its full nakedness! Though there are some who buy gold and silver because they believe they will “go up”, the REALLY BIG money buys metal to get out of fiat and the system as a whole. A bank run away from the system if you will? Whether or not they can find and kill Bin Laden for a 9th time remains to be seen, but they had better pull some sort of rabbit out of the hat immediately. Otherwise, we will see gold, silver, and the miners breaking out to new ground and the train fully pulled out of the station within a week or two.

There is no bull market like a gold bull market the saying goes. This is because “fear is a far greater emotion than greed”. A stampede into the metals will ultimately create a failure to deliver. When you tell a human that something is not available at any price, they only want it that much more! You are watching the canary in the coal mine, how much life is left in the empire? Stay tuned!

Standing watch,

Bill Holter