Upside breakout

After a dreary winter, the long overdue spring has arrived for the gold and silver markets. Battles were fought for the past two days over options and futures expiration, and the Gold Cartel could not defend $950 or even $960. Silver poked its nose above $15, and then went through it today. The silver open interest is barely 100,000, so there is plenty of room for that to expand, and it looks like the speculative longs are willing to take on JP Morgan and HSBC at these levels.

For Silver Standard, this couldn't have come at a better time, as they are about to sell the first silver concentrate from their Pirquitas mine. Things did not look nearly as good six months ago when silver was lanquishing around $9, but Pirquitas will be an amazingly robust project with silver at $15+.

I doubt that this signals the death knell of the Gold Cartel, but it is more proof that they are on the wrong side of history. The distortions in the silver and gold markets are growing, and it is becoming progressively harder for the bad guys to keep a lid on things. Ultimately, this will end with a failure on the COMEX. One of these months, someone won't be able to deliver silver bullion, and will be forced to settle in cash.

It looked like this scenario would occur last year, but the hedge fund deleveraging that began in July raised the specter of a deflationary crash, if not the collapse of the entire global financial system. This time around, we have massive amounts of money being printed all over the world, and the game is up. Silver is no longer an industrial metal, and industry supply and demand figures are meaningless. Silver is now a monetary metal, and investment demand will drive the price of silver. It does not matter how many new silver mines come on stream, as depreciating paper currencies will spur investor demand for physical silver bullion.

The story in gold is much the same. China will buy all the gold the Western central bankers are willing to sell, and then some. Best of all, the mining equities are leading the precious metals, and providing leverage to metals prices, as they should. As the saying goes, get in, sit down, shut up, and hang on!

Confession of guilty pleasure: I enjoy watching Britain's Got Talent. In fact, I have gone so far as to watch BGT every day this week. Well, one day it wasn't on, having been preempted by some soccer game or something, but every other day this week. That's not easy to do since it isn't televised in America. But the performances are being posted on YouTube. First, I find out from my news reader which acts made it into the next round. Since I used to be an air traffic controller, I understand Zulu time, and can easily translate to my local time. See, I knew those twenty years in ATC would come in handy one of these days.

Later on, the performances are posted on YouTube, and still later in the day, the judges' comments. The talent level ranges from amazing to awful, and everything in between. For instance, there's this fat Greek guy and his 12-year old son who run around on the stage and pretend like they're dancing. Don't laugh, they just made it into the finals. But the star of the show is a dumpy, plain-looking 48-year old woman from a small village in Scotland. She's never accomplished anything in her life, but she just happens to have an amazing singing voice. Among her competition is a 10-year old girl who also can sing, and will one day be a star. Then there's a guy who plays, of all things, a saxophone, but he's really good. It's like watching a soap opera, but these are real people chasing a dream, and it really is compelling theater.

Here's a parody of two of the main contenders, Susan Boyle and Hollie Steel:

http://www.youtube.com/watch?v=a7qXYpc3bDs