Gold 2000.00 by Year's End, and Silver 100.00 By Year's End

Politicians should stick to what they're good at, groveling for money to fund their next re-election campaign and making pompous speeches to stir up even more partisan bickering. What they should not do is stop making believe that they know anything about economics. If I bought Harvard University it would not qualify me to teach organic chemistry. Well the same is true of politicians. Just because you have a pleasant smile and a personality that does not completely turn every voter off does not make you qualified to speak about economics. Politicians should simply stick to what they're good at and if anyone can figure out what they're good at would you be kind enough to drop me a post and let me know. As I predicted last week the meeting between French President Nicholas Sarkozy and German Chancellor Andrea Merkel was more a photo op and a reason to have tea than a real opportunity to do something of substance to deal with the debt that is eating away at the fabric of the European Union. The reason for this has been long been known and written about. In an essay by one of my favorite writers Martin Armstrong he talked about the folly of creating a euro currency without creating a Euro debt. He argued that all of the European debt should be combined in to one debt. Indeed, by not consolidating all of the European debt onto one Euro – Bond as an alternative to the ability or inability to trade their currency, then Europe has all but guaranteed the collapse of the Euro. As I read this essay I imagined all of the states in the U.S., which have their own budget, also having their own printing presses to solve their debt problems. In case that wasn't clear, while every state has its own budget and debt concerns, the U.S. has one currency and one debt. The federal government collects taxes from all fifty states and doles out funding to each state on an “as needed basis.” Sometimes one state will receive more funding than another state but we see ourselves as on nation working together. So to finish with Sarkozy and Merkel, the fact is that they have not got the idea that if they want one currency then they have to have one combined debt. Maybe they might want to read some of the fine posts on Martin Armstrong's site and learn a little bit about trading because until they fix this problem the bond bullies will short the Greek, Italian, Irish, Portuguese and Spanish bonds. Sadly what effects Europe affects our economy. Our banks have Billions of dollars that have been leant to European countries. The degree of uncertainty that exists today is tearing the world apart. Not even China, India, Russia or Brazil are exempt. This is now a global economy. The only safe haven that governments and people are flocking to is Gold and Silver. While the gold trade is unbelievably crowded there seems to be no stopping it. While JP Morgan put a target on it of $2000.00 by the end of the year I'd be surprised to see it not hit $2000.00 by the end of next month. Silver broke a key level of resistance on Friday and did it in a convincing fashion. Until Friday the Silver ETF (SLV) had stubbornly held onto a resistance level of $40.04. In Friday I blew through it and closed over $2.00 at $41.68. Please see the enclosed chart below. A study of this chart will show that since it corrected back in May it has been floundering around in the 35 range and it did stage a fake break out and ran up to $40.04 but pulled back. What makes this breakout all the more convincing is that The MACD has yet to confirm the breakout by crossing over the nine day exponential moving average, and that tells me it still has a lot of room to run. When it does it will go to $50.00 in a hurry. In fact I'm changing my target for end of the year to $100.00 because when it breaks $50.00 it will run to $100.00 in a hurry. The only thing that will stop silver running up in a hurry is if Gold crashes. While I don't see this happening if it were to do so it would drag silver down with it. I sent my readers an alert Friday night and told them to start buying in slowly and keep a watchful eye on gold because that could be a game changer. Recently, Denis Gartman was finished a speech and got in a cab to catch a flight back to Virginia Beach, where he lives. The cabbie said he looked familiar and Denis told him he was on CNBC from time to time and they guy connected the dots and gave Denis a course on owning gold all the way to LaGuardia. As soon as Denis got home he sold half of his Gold ETF (GLD). I saw a video on YouTube by a very smart man who calls himself Brother John F and I would encourage you all to watch this video by clicking here. I have been watching his analysis for over a year and he has no agenda but simply reports what he sees. I would urge all readers to make him a favorite site and when he posts his videos watch them because he has been spot on for as long as I have watched him. So in conclusion, we need to keep an eye on the key levels of the Dow and The S&P. A close below 10906 in the Dow will signal a further correction down. Last Friday we closed at 10817.65 so I would expect a further pullback because the next level of support is 10320. If we break that level we will see a retest of the 2009 lows. The key to watch this week is DR. Bernanke's speech at Jackson Hole. If he doesn't whisper some sort of QE3 (in whatever form he chooses to call it) I see the probability of a continued sell off. Pease see chart of the Dow below. A study of this chart clearly shows we are very close to testing the support level of 10600. If we break this level we will go to 10320 in a hurry. Dr. Bernanke's speech at Jackson Hole on Friday is the X factor. Last year he gave a speech and announced the implementation of QE2 and the market rallied. This year he is under tremendous political pressure to not add any further economic stimulus but amongst the economic turmoil, Wall Street is hoping he brings a big shiny present of a further round of QE. If he announces further economic stimulus gold and silver will rally. If he buckles to the political pressure on him and he does not announce any further economic stimulus gold and silver will go parabolic. I am and have advised my readers to be long GLD, PHYS, IAU, UGL, SLV, PSLV, AGQ and to hoard cash. Having positioned themselves properly, no matter what happens next week I believe my readers stand to be the big winners.