Silver demonstrated yesterday why I am so bullish on it. While gold was down, silver was up over 1%. Very, very solid. Additionally, silver is now over the resistance level at $17.80 and now we wait and see if it can hold that level for a day or so. If we do, I think we will rapidly move higher as besting that level demonstrates that the bottom of this correction has been hit. Gold has yet to rise past the resistance level it needs to in order to demonstrate that it has seen the bottom of its correction (even though I think it has).

$17.80 is the maginot line for the shorts. A close above this level signifies that the correction is over which will empower the bulls to return in masse. Once the bulls return, the momentum funds will follow.

I am watching this level closely because of what it represents.

Those that are holding the shorts in silver know the significance of this level. It represents a terminal event for them and will ultimately force them to seek cover as they have lost the upper hand.

We are in MAJOR Wave III, the dollar is ridiculously overbought, the Fed is boxed in, and TPTB are doing anything and everything they can to obfuscate the fact that the system is hopelessly corroded and corrupt and its collapse is imminent. The only thing holding it together at the moment is the ignorance of the masses and that is changing by the day. Look at Iceland. The people are rising up and uniting behind the idea that they arent going to take it anymore. They have had it with the corrupt politicians and bankers and are prepared to take action.

Sinclair is right. The dollar is in for a very rough, harsh winter. The winter season is only 2 week old and the dollar is poised on a precipice with rocky shoals underneath.

If you doubt this analysis, please explain to me how the main markets can remain levitated at absolutely ridiculous and historically unprecedented PE levels. My interpretation is that money is seeking shelter in any tangible assets it can because it knows what is coming…what is imminent.

Explain to me how the worlds biggest bond fund – PIMCO has decided to get out of the government bond business, and is downright skeptical of even buying municipal debt. Bonds are their business, and they are getting out. What does that tell you? My interpretation is that Bill Gross knows what is going on as well as any other person on the planet and he is positioning his company – his lifes work – to minimize the damage. Dont be surprised when it is announced that PIMCO will be following the lead of a famous hedge fund manager (you may know his name – John Paulson) and purchasing precious metals and the related mining companies.

Do you understand the enormous amount of money that is going to be seeking shelter in the smallest markets on earth? Do you understand how tiny gold (and especially silver) are in relation to the amount of money floating out there? Can you see what that money will do to the precious metals as they pry their way in the door?

Gold 1.6.10