Silver Continue to Rally

As physical silver shortage continues, price of  silver should continue to rise as well seeking supply. Although price has rallied over $20 per ounce since silver's price backwardation started, when silver was only $17 per ounce, backwardation still continue to persist to this day, an indication that price will need to rise much further to achieve it equilibrium price. A further rise in price would intensify the already intense short-squeeze in silver.

Here is a chart of spot silver taken today at the end of the day.

Gold at another Record High Price

As the day progressed and as short-squeeze in gold intensified, gold continued to make record high price closing up over $20 per ounce for the day. Baring any concerted effort by the US Federal Reserve to whack gold price down ahead of this weekend's Bretton Woods II meeting, short-squeeze should continue to intensify into the weekend, and may reach $1,500 to $1,650 per ounce by the weekend.

For us economist who follows the Austrian School of Economic Thought the current run-up in precious metals and commodity prices is a given as a consequence of the reckless US Central Bank policies of flooding the world with useless fiat paper dollar bills, with US dollar a World Reserve Currency. But for those mainstream economists, followers of the "Keynesian's Economic Thought"  whose group currently dominates the economic landscape in both private and public sectors, the relentless rise in commodities price is a mystery, something that baffles them. 

With no end in sight for the current US Federal Budget deficit, the Fed money-printing cannot end until there is total economic collapse such as the Weimer Republic or Zimbabwe. As a consequence, there will also be no end in sight for the current bull market in commodities.

Here is a chart showing gold price at the end of the day today.

Gold at New Record High

Gold had just reached a new milestone record high price just a moment ago. As "short-sellers" get squeezed and pulverized, gold is set to rocket up to the next target price level of $1,650 in a very short order before pulling back down on some profit-taking, which should be short-lived.

Gold bull trend's third wave up is just at the beginning stage, evidenced by the lack of participation by retail investors and regular man on the street, still missing in action. Gold bull trend still has a long way up to go both in "Time" and "Price". Here are some of the factors that should continue to support gold's upward price tragectory.

• 1. Bretton Woods II is just about to begin this weekend, with the meeting set to commence on 8th April 2011 in Bretton Woods. The main purpose of the upcoming meeting is the establishment of the New World Reserve Currency to replace the US dollar, and that is very very bullish for gold, as the new reverse currency may have to be partially back by gold.
• 2. The Collapse of Europe, which started with Greece, Ireland and now Portugal. After Portugal will be Spain, then Italy. Saving these countries will require massive amount of money-printing by the European Central Bank.
• 3. The coming collapse of United States of America, but before that happens, the US Federal Reserve will print money into oblivion.
• 4. Unrest in the Middle East, which both the European and American governments co-engineered in order to divert attention away from their collapsing economies. The current unrest can get out of hand very quickly and thus bullish for gold.
• 5. The most important factor is the continual money-printing at an accelerating pace out of thin air by the US Federal Reserve, flooding the world with useless paper dollar, triggering massive inflation worldwide. There is no end in sight for the Fed's money-printing to finance the ever-increasing US budget deficit.

US Dollar at a Precipice, Gold and Silver Price May Rocket

US dollar collapse would be a surprise to most people but the signs are all around for everyone to see. As the US dollar approaches a critical support level, its declining momentum is accelerating, assuring a high probability of a break that has the potential to turn a smooth orderly decline into a runaway waterfall decline. A break below key support level on the US dollar index could signal the beginning of the end for the US dollar hegemony.

Here is a documentary called "The Day the Dollar Dies", a realistic depiction of what to expect when that day come. 

Video Link: http://www.youtube.com/watch?v=AuPgdZeAFjA

With so much US dollar floating all around the world, a sharp collapse could start a stampede out on the US dollar and into real assets including Gold ans Silver, more than enough to trigger a relentless short-covering panic that can push Gold and Silver price to the stratosphere. 

The dollar collapse will be catastrophic to the US economy because the Federal Reserve is essentially out of bullet, stuck between a rock and a hard place, rendering the Fed powerless to do anything to stabilize the situation. 

Staying above $1,410, Gold Price is set to Explode

With gold price remaining above $1,410 the stage is set for gold price to rocket up to the next upside price target of $1,540, and it can happen in a blink of an eye.

The momentum or speed of the up move would be closely tied to the US dollar, now at a precipice, having failed to attract any safety-conscious global capital as a result of the engineered turmoil in the middle east.

With no end in sight for the US Federal Reserve's legalized money-counterfeiting activities, global capital is now starting to flee the US dollars, even as the turmoil in the middle east and the threat of euro zone collapse intensifies, and running into real assets (commodities) such as gold, silver, crude oil, etc.

With the collapse of the US dollar, there is no limit as to  how high gold price will go. But for now, my next upside target is $1,540, then $1,650, then $2,150 and higher.

The main event to watch for is the price action of the US dollar as it approaches and or break 72 - 74 key support level in the US dollar index.

Silver Shorts Getting Crushed, US Dollar at a Precipice

Another large up day again for Silver as the shorts continue to get crushed. As the world inflation continues to intensify, Silver short-covering should continue to intensify as well.

US dollar is now at a precipice and major collapse is imminent. When it does the world will be "shocked".

Gold In Breakout Mode Targeting $1,540

With a break above prior major swing high price, as price pushes higher, major short-squeeze is imminent.

And when that occurs gold price should explode and rocket very quickly to my next price target of $1,540. For the fast move up to happen, any pullback now should stay above $1,410.

Short-sellers should be in a panic mode now, and may be ready to capitulate