I haven’t turned on my television in months other than to watch Game of Thrones on HBO (I highly recommend it if you haven’t seen it although this season has been slow so far) so it was an interesting experience watching CNBC for the first time in ages on the plane. Since markets are solely at the mercy of Central Planners at the moment, when The Bernank speaks on an FOMC day I try to watch.
Despite being someone that holds the Central Banking profession in extremely low regard, every now and again there is a soft spot for in me for these guys as I realize the impossibility of the situation they are trying to manage. Overall, I thought Bernanke looked concerned and timid during today’s testimony. He had the demeanor of someone with the world on his shoulders. Although the testimony itself was a giant yawn (as was the FED statement) all did not seem well to me.
I continue to think that in his mind Bernanke believes the economy needs a lot more stimulus. I don’t think for a second he believes we are in or anywhere close to a self-sustaining recovery. While he tried to toe the line to incorporate the dissenting views of the committee, at times his true bias came out. That is why stocks rallied and why they couldn’t break gold and silver despite heroic efforts.
We may be at a significant inflection point for the metals. Gold has had every reason to completely break down and crater if we were in what some people mistakenly claim to be a “bubble” (fiat money’s purchasing power is the real bubble). The Chinese economy has crashed pretty hard, India’s economy is a mess and their gold market was closed for an extended period recently due to a proposed doubling in the tax and supposedly QE is off the table. Well if all these key bullish factors went away why hasn’t the so called bubble popped? The reason is because it is not and never has been a bubble and because the market understands the entire world will enter deflationary collapse without a tremendous amount of more money creation and the Central Planners of the world will not allow that.
I think the next couple of weeks will be very important. TPTB have made many attempts to completely break down the gold and silver markets, but at the moment they both seem to be simply carving out the right side of a large reverse head and shoulders. We shall see. I suspect they will try again to break them before the June FOMC because they probably will have to do more stimulus at that time or risk a collapse into November’s Presidential election. Retail seems to be out of the market on both the buy side and the sell side. So it has been institutional buying holding up the market in the face of officialdom’s manipulation. The stage is set here for a cleared market and a major move higher. The only question is will there be one more major attempt to break the market? Perhaps but I think such an attempt is likely to fail because if these markets were doing to break down they should have done so by now.
From NYC this afternoon,