Saturday 21 March 2015
The Asian Infrastructure Investment Bank [AIIB]. What is it? Yet another political
disaster for the Obama administration as it leaves a wide swath of blunder after blunder in
massively failed efforts to keep US allies from aligning with China’s newest anti-US, anti-
fiat Federal Reserve “dollar, AIIB. It will not just compete with the World Bank, a US-
dominated financial entity, the AIIB will logically replace the World Bank in its own Asian
sphere of influence.
Obama is pissed, a crass way to express his sentiment but an apt word choice for a crass
politician with virtually no international diplomatic skills, and the AIIB amply exemplifies
how true this is. The US continues to become more and more isolated through its ongoing
war drums beating incessantly as the only viable solution the US has to offer.
Remember, just a few weeks ago, when German Chancellor Merkel schooled Obama over
Ukraine, urging a “political solution, because that is what we do as politicians.” Obama
did not like that, and he glibly responded he had not yet made up his mind, as the US
continues to send money, arms, unofficial troop support, and an expressed intention to
send “lethal weapons” to the totally inept Ukrainian army. The best way to tell if Obama
is lying is to see if his lips move.
As a means of hiding its failed “policies,” for lack of a better word, to hide its failed
economic banking system, and to avoid taking the blame for a failed American economy
about to be flushed down into a debt abyss, Obama is itching to start a war with Russia.
He has so far been failing in that arena, as well. No country wants another war, none,
other than the US, led by the Obama administration. If WWIII breaks out, as an
increasing number of voices are expressing, it will be due to the singular effort of the US
and no other reason.
Back to the AIIB. It is a clear announcement by the rest of the world that the fiat “dollar,”
as a world reserve currency is fading faster and faster away as the leading international
currency for settling trade between nations. The AIIB is China’s announcement to the rest
of the world that it has had it with the bully tactics of the US, and China wants, is actually
closer to demanding that she be given her due respect as a world leading power overtaking
the US in increasing measures for what constitutes a new world economic leader.
The AIIB will become a leading lender for new development, particularly in Asia where a
lot of new growth and development is underway. This is in sharp contrast to the US that
uses warfare as its badge of “economic development,” more like destruction. Just look at
Libya, Afghanistan, Iraq, now Ukraine, ongoing attempts to destabilize Syria. Anywhere
the US is involved, it is destroying nations. By contrast, China and Russia are making deal
after deal for true economic development in and with other countries without immersing
those countries in unrepayble debt situations.
China’s AIIB will put an end to that, and the US is very unhappy. The UK agreed to join
with the AIIB, much to the consternation of Obama, accusing the UK of “constantly
accommodating” China. Obama chooses to ignore the fact that it was the US that gave
Most Favored Nation status to China in the late 1990s, strengthening China and
weakening the US, ultimately, but the US is “exceptional” and can do what ever it wants, or
so the US thinks. A growing number of countries have turned their back on the US, and
now the growing list includes what were once considered close allies.
Right after the UK came France, Italy, and Germany, all willing to join with China and the
AIIB. If that were not a sufficient slap in the face to no-face Obama, Australia chimed in, a
huge US accommodating agent-nation, but another one that has acknowledged extreme
disappointment with ham-handed Obama diplomacy. Expect South Korea, even Japan to
also join in the AIIB’s constructive goals for world economic development. The number
of countries that have already signed on is around 25, and growing.
The fiat Federal Reserve “dollar” is done, not quite officially, but the angle of the slope
keeps getting steeper in its dissent. For all of the indignant huffing and puffing by Obama
and his administration officials, this is still orchestrated Kabuki theater by the elite’s
banking system. As we stated previously, the elites are merely switching horses, and the
show for the masses must go on.
Ultimately, this is bullish for gold and silver, but the prospects for a ramping up in price
for both metals will be as slow a process as the demise of the “dollar.” All the world’s a
stage remains as true today as it was in Shakespeare’s As You Like It, [Act II, SceneVII].
All the world central banks are tied to each other, perhaps least of all for Russia, but the
change in currency structure, leading to Special Drawing Right [SDRs] as the next
replacement world currency will not be denied.
There is no direct correlation in the AIIB development and the pricing of gold and silver,
but it serves as another nail in the coffin for the US “dollar” and its ultimate defeat into
utter rejection. As we stated previously, the purposeful transition of the “dollar” demise
and the ascension of SDRs as a replacement, endorsed by both Russia and China, will take
place in an orderly fashion, at least for the rest of the world. It may become quite
disorderly in the US as the “dollar” descends to its true intrinsic “value,” which is zero.
When the sleep-walking American public realizes what has happened, it will be far too
late, and a goodly number of them will have had their pensions raided and replaced with
[worthless] government bonds, the same ones the rest of the world is rejecting in toto.
It remains an unknown as to how gold and silver will respond to these ongoing and ever-
changing events, but as the charts reveal, there is no defined, or at least not a confirmed
bottom, just as there is not a confirmed top in the climatic rallying in the value-less paper
fiat “dollar.” Even once a top can be identified for the fiat “dollar,” it can take many more
months of a distribution topping phase, just as the bottoming process for gold and silver
has taken over 4 years. Anything can happen, including a straight, precipitous drop.
Nothing has changed in the reasoning for buying and holding physical gold and silver,
except of course the lower prices. PMs have been both purposefully and blatantly
suppressed by US and UK central banks. The death grip has not yet loosened during the
death dance of the fiat “dollar.” Things change, and the rate of change is ramping up, but
none of it has been translated into higher gold/silver prices.
The entire Western banking system is corrupt and bankrupt, held together by issuing
more and more fiat, but only into the totally insolvent banking system. For as long as
people are willing to buy into the lies spewed by the criminal enterprises, more commonly
known as governments, the “emperor-is-wearing-no-clothes” mentality will keep the
elite’s sinking fiat ship alive. There is obviously no known solution for world-wide
We can find no single nor unifying event that relates directly to the overall movement of
developing market activity in PMs, and they still have the feel of being actively
suppressed. It is for this reason the charts remain the best source for reading what may
happen to each metal. Our read starts with silver.
Last week and this week’s charts are great examples of how reading market activity has
logic to the process. [As an aside, we added a brief commentary on Trading Developing
Market Activity, showing a trade in the making based on reading chart development, for
anyone who thinks chart reading is akin to tea leaves.]
Patterns repeat, over and over, which is why the arrows show how prior wide range rally
bars in a down market led to immediate resistance and sellers resuming control. It
remains to be seen of the November ’14 spike low becomes a bottom. For now, there is not
Last week, there was no outstanding feature on the daily chart, except a throw-in comment
of a possible bear trap close. Turned out to be accurate. Often, what the market is saying
cannot be identified with certainty until after the fact. Refer to Friday’s strong rally and
close, along with the sharply higher volume. Is it strength, or a mini-climatic rally? Intra
day activity can help answer the question sooner than waiting for the daily to complete.
While gold is rallying off support from last November, this is the 4th retest at sub-1200
lows. The more often a level is retested, the more likely it will fail. With that possibility in
mind, there is still no confirmation of a bottom, at this point.
This is last week’s daily chart shown again to make a visual comparison with the
observations made that led to this past week just ended. [EDM = Ease of Downward
The point is to show how drawing what appear to be pertinent support/resistance lines are
not just a past tense exercise, but show where price may meet up with resistance or find
support, as the case may be. The overlapping of bars mentioned 2 weeks ago, occurring at
a level of support from last November, and added lower channel line support, gave a
higher degree probability for a rally than one could otherwise expect. These pieces of
market information are not random.
With the discussion of China’s AIIB, and the Western banking system falling apart in front
of everyone’s eyes, or at least for those willing to look, the reasons for buying and holding
PMs have not, and will not change. Timing has been an issue, but owning them is not.