We are entering that malaise phase, otherwise known as a correction. April, May is historically just about the worst time of the year for precious metals. The move recently is following similar moves of varying degrees in past years.
I don't know what Montanore was saying in suggesting we risk a "bond default". I don't think Wall Street will let Washington not raise the debt ceiling. It is a foregone conclusion. I can almost hear the conversations behind closed doors. Boehner to Goldman Sachs CEO, Lloyd Blankfein, "yes sir we understand the gravity of the situation, but we want to get as much out of the Democrats as we can before we agree to raise the debt ceiling". And I assure you, they will raise the debt ceiling. They aren't THAAAAAT stupid.
As for Montanore's point about the deflation risk, this is the important point. QE2 is scheduled to end in June. We had a weak GDP report in the first quarter. The Empire State manufacturing number was weak this morning. Jobless Claims have started to trend up instead of down. The economy is teetering on reversing gear downward. Once QE2 ends, and Congress cuts more spending, the economy is going down down down. Then the question becomes, how long does it take for Bernanke to announce QE3? The conventional wisdom is that the Fed is done with QE. I've been predicting for months that we would see QE3 by the end of the year. I have been among the small minority in predicting this. Until we get an announcement of QE3, the stock market is vulnerable to a downturn as are commodities. And unfortunately for us, silver could have more downside to go if commodities and the larger stock market go for a ride down. But I'm still holding tight here, because I think the powers that be will have no choice but to renew trying to inflate our way out of the mess. Because if this thing goes to its ultimate conclusion, we will see the 1930s all over again. And Ben Bernanke will never let that happen without a hell of a fight.
AI
