The U.S. government is broke/bankrupt. We are currently $14T or so in debt with future obligations of almost $75T. There is absolute zero desire from our political class to address this issue because "austerity" will cost a lot of power-hungry politicians their power.
The goons and hacks at the U.S. Federal Reserve understand this. Besides default, which isn't possible, the only way out of this overwhelming debt burden is through inflation of the money supply. Simply stated, you pay off yesterday's bills with the devalued currency of tomorrow. This is what will and must happen. There is no alternative. The responsibility of The Bernank and his cronies is too attempt to bring the dollar slowly. A steeply descending and crashing US$ would have grave consequences for world inflation and stability. Therefore, though the decline and devaluation of the dollar is inevitable, every attempt is and will be made to manage the decline in stages. Economic reality dictates that the only viable tool the Fed has to manage this process is MOPE (Management of Perceptions) and SPIN (disinformation and outright distortion of data).
This is exactly what we have seen in the past 24 hours. Take a look at this 2-hour chart of the June POSX (our new name for the USDX):
Note how the rally from critical support near 75.50 had been blunted at 76.70 and the index was beginning to rapidly accelerate downward, back toward a test of 75.50. "Good heavens", exclaimed The Bernank, "we must act quickly". Thus began an almost endless parade of Fed hacks, breathlessly proclaiming that QE3 was in doubt and that higher rates lie just over the horizon. The result...a sharp rally in the POSX. Then today, on the back of a "better than expected" BLSBS report (which the Fed clearly knew in advance and is bullshit anyway. Over half of the "payrolls" are imaginary jobs courtesy of the "birth/death adjustment), more SPIN has driven the POSX back up to 76.70. Do not be surprised if the SPIN continues in a desperate attempt to drive the index toward the next resistance at 77.15 and paint the chart with a break of this intermediate trend:
Will they succeed? Probably but who cares? Always remember the big picture. The only way out of the U.S. debt debacle is to devalue and inflate. Period. If the POSX heads up toward 77 or 79, it doesn't matter. It will roll over again soon and the managed decline will continue. Do not, under any circumstances, allow the shills and topcallers to scare you out of your PMs. Physical gold and silver are your only protection against this madness.
OK, onto the PMs. Part of my responsibility here as chief chartreader and handholder is to provide you with support levels to watch on days like this. If support holds, you can feel good about doing some dip buying. If support fails, you can lightly liquidate if you'd like and look to buy back at the next support level. For today, here's your gold chart:
We continue to be rangebound between 1415 and 1445. There should be LOTS of support near 1415. We've already seen it in the time its taken me to print this chart and write this blog. Gold bottomed at 1413.50 and is now already back to 1422.30.
Here's your silver chart:
Again, in the time its taken me to type this, we've dipped to 37.08 and recovered to 37.30.
So, hang in there and never lose sight of the big picture. If all the BS becomes too much to take today, I suggest you shut off your TV and computer and call it an early week. The important (for silver) month of April begins in earnest on Monday so be ready. I'll post more today as conditions warrant. TF
1:10 EDT UPDATE:
If you're looking for something to watch, a close above 37.98 will give us an UP ORD in silver. A close below 75.88 on the June POSX will give us a DOWN ORD for the $.
It goes without saying that both developments would have significant implications for next week.