News out of Asia is roiling both the gold and silver markets this evening. Apparently Economy Minister Amari spooked the Forex markets Sunday when he stated that further weakness in the Yen could actually end up damaging the nation's economy.
Obviously this is the FIRST sign we have seen out of official Japan that the level of Yen is now low enough for the powers that be there. Again, it is just one minister and there is no official change in policy but he is voicing concerns that the currency might have fallen a bit too far, too fast.
His comments are being used as a reason by some Yen bears to partially cover existing yen shorts and realize some gains. The downside to this as far as the precious metals go, is that Yen Gold and Yen Silver are taking a vicious beating as a result. Take a look at the following chart of Silver in Yen terms and you will see exactly what has happened to that market. It plunged over 8% at one point!
This is resulting in Japanese traders further selling gold and silver to minimize losses or to actually cover losses in their short currency positions, which caught some of them leaning a bit too heavily onto the short side of the Yen.
Silver in US Dollar terms, has fallen to within 25 cents of MAJOR Chart support near the $20 level where it uncovered ferocious buying so far. Reports out of Asia are emphasizing the surge in demand this is uncovering. We'll see if that holds as we move into Western trading hours.
I want to note here that the volume on the collapse in price towards $20 is pitifully low. The selling appears to have occurred into a void which is the reason that the price fall was so exaggerated. The bulk of the selling is actually occurring in Japan, but there does not appear, thus far, to be the same appetite to sell silver in Dollar terms down at current levels.
Yen gold has confirmed the double top pattern shown on the daily chart with the significant breach of its former support zone. In classic textbook fashion, price rebounded to retest broken support, now turned resistance, and promptly failed. This evening's losses are pushing price back towards the spike low shown on the chart.
It really is quite uncanny; no matter how much money Central Banks continue to create, and Japan is certainly no laggard when it comes to running the printing presses, gold continues to fall completely off the planet, almost as if it is being sucked into an enormous black hole. No matter what it is, gold or silver, investors in general seem to want no part of the metals unless it is to SHORT them.
One would have to judge that the modern Central Bankers have completely redefined the very concept of money itself. It would seem that prosperity can be created at will, with no consequences whatsoever. Have we discovered the Holy Grail of human prosperity? My guess is that it is only a matter of a few more years of this and poverty itself will be resigned to the dust bin of history, a relic of an ancient unenlightened age. What's next - the elimination of death and disease??
"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput
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