The big news of the day: the confiscation of bank deposits in Cyprus. This “could” turn out to be the Black Swan event that turns everything upside down. The trigger will be, like this event, unexpected and sudden. If nothing more, this should be a wake up call that things are normal until they aren’t. The central banks and major governments have so many holes to plug in the dike that one wonder’s if they have finally run out of fingers?
If the markets were free and not manipulated, and if gold were allowed to react in a normal and logical manner, the events we are facing should cause gold to cruise past $2,000 right now. Every major country is devaluating their currency in order to hold onto market share. There are only so many dollars to be spent, and no one wants to lose their share of exports to another country because their currency is too pricey. Japan is leading the way and with the currency grab in Cyprus, the euro is tumbling too. The British Pound is a basket case and taken all together, the best-of-the-worst, the US dollar is looking strong. Well, make that a better choice than the other garbage out there. This is exactly the kind of situation that should favor gold. Gold for safety and stability.
So far, gold is RISING (up $10) along with the dollar (up 0.47). Since gold is denominated in dollars, they usually move in opposite directions, therefore this move up by both the dollar and gold speaks well for gold.
A week ago, Sinclair said the bottom is in (above $1,550). He promised that gold would be moving well away from $1,600 by March 27th. So far, his predictions are holding up – but I expect no less from him. His predictions have a way of almost always coming true. If gold and silver continue their upward move, there will be a lot of short covering and that means the funds will turn from selling to buying. Things could get interesting very fast now.
Check out the comments on Cyprus, and what it means, in the following articles from Bill Holter, Andy Hoffman, Jim Sinclair, LeMetropole Café and Rick Ackerman. And keep a close eye on gold, silver and the dollar. Storm clouds are on the horizon!
Also, read the comments below from Jim Willie. He is always a fascinating read, and his newsletter (Hat Trick Letter) is one of my favorites. I highly recommend it to my readers. It is definitely worth subscribing to.