Many shall be restored that now are fallen and many shall fall that now are in honor

Oversold it was!

During Access Market trading late yesterday, the "algo trade" of gold dipping every time the DOW went down a few points ceased. It was not pronounced, but very noticeable. Gold actually upticked a few dollars as the DOW fell. It was a precursor for today’s dramatic moves by gold and silver to the upside.

Gold and silver were higher and then exploded not long after Comex trading got underway. The real explosions occurred as the dollar rose modestly and then the DOW went from higher on the day to get hitting hard.

What’s the deal?

*Gold and silver were incredibly oversold. In a way it was the perfect storm in that The Gold Cartel engineered the entire move. As they did so, they influenced hedge funds to dump their long positions and put the technicals in bearish mode, which had the moving average funds going short. Basically, even though the commercials have been covering, they are still very short … meaning everyone was short.

*As has we have been reporting, central banks and other major league players have been buying for the big picture for various reasons, depending on the nature of the institution. That left a vacuum of sorts above the market with few left to sell. The perfect scenario for the kind of rocket ship action we saw this morning. Trapped shorts found few sellers as they went to buy back their positions.

*In addition to those shorts who were covering, there were the "algo" traders who were trying to do the same. What was a trickle of covering the long DOW, or other stocks, versus short gold/silver and the precious metals shares, became a stampede. It was a bit astounding in that this sort of violent reversal of form revealed just how prevalent that particular trade really was.

*The Planet GATA view of the world economic/financial market scene is proving to be right on with...

-While not Einstein stuff, appreciating the situation in Europe would continue to fall apart with no solutions in sight. The citizens of many of the Euro countries won’t accept that their standard of living is way too high and must come down, but they won’t accept austerity. Many of the Euro countries are broke. Reality is causing further deterioration in their stock markets.

-The US financial news this morning was very disappointing. That news sent our stock market down yet again, in what has become a daily event. Americans are in the same boat as many Europeans regarding what the politicians in our respective countries have taken our economies. We are broke too. It is not only our government, but some of the states, like California, whose deficit has ballooned to 16 billion dollars. For years it has been a theme of mine that the standard of living in the US must go down 35% before our fiscal mess can begin to be rectified. Nothing has changed the past couple of years to change that opinion.

It is mindboggling we have not had a budget in more than 3 years. That is just how off base the situation is in the US. When the US Government finally is forced to deal with our fiscal problems and debt, the reaction will be the same as in Greece. What a mess!

-The Fed and our government know just how serious our fiscal/economic situation really is. They know they are going to have to do more massive stimulus/money printing to stave off continued market selloffs. SO, to defuse what they are going to do (doing), they orchestrated the staggering takedowns in the gold/silver markets in a Shoot the Messenger drill.

That is just a recap of what has been brought your way for weeks. What is important is that the Planet GATA crowd can appreciate what is going on versus many of the Planet Wall Street crowd, like a Dennis Gartman, who is clueless, and others who have been decrying gold as a safe haven. As a result of today’s surge, gold is now up 12 years in a row again. Gold is a safe haven and only doesn’t act like one in the short term because of what the Gold Cartel does. Those mouthing off about the gold market, that don’t deal with the market manipulation, are not worth paying any attention to. And yet, ironically, they are the ones that the financial press gives so much public visibility to.