Notes From the Rabbit Hole

Silver Has Broken Trend, But…

Very simply, the weekly moving average that contained silver through its bear market has been broken to the upside.  That is another booster of our assertion from earlier in the year that any coming blow off would not be terminal (ref. early 2011) but rather the completion of a launch phase off the bottom.  This will be the case as long as silver is above the weekly EMA 55.

Less clear is silver’s status vs. gold and this one indicator (well, it and its evil brother the gold-silver ratio) will tell us whether we are going ‘inflationary up’ in a full frontal Misesian Crackup Boom, now or maybe later.

There is reason for caution now on the whole damn shootin’ match.  Everybody’s a genius, which is what inflation makes investors look like.  FOMC on deck.  If she rolls over again I swear the mask of any pretense will melt right of her face.  We have been noting a coming waning of confidence in the Federal Reserve and that would be due to its having been exposed once again as the chronic inflator that it is.

If they are going to make a statement, with precious metals, commodities and emerging markets (i.e. components of the anti-USD trade) flying in their face, they might want to make it now, or else credibility is going to take another hit, a big one this time.  That is what silver is saying.  So what kind of message has the rise in the ‘inflation trade’ provoked to come out of next week’s meeting?

We are at a dangerous point, with speculators running on pure momentum.  I’d be err, careful here.

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