Bernanke Sneezes and Gold and Silver Fall Dead

I don’t know about you, but I have serious reservations about any one man having the kind of power that the Chairman o the Federal Reserve has.  I said yesterday that the breakout in silver, if there was any rationality left in the markets, would run for a bit before deciding what to do next, which was sell off more than 10% peak to intra-day trough.  Well, it did, for all of about 90 minutes today before Ben Bernanke gave his Humphrey-Hawkins testimony and created a panic in both the stock and precious metals pits for fear that he would take the liquidity punch bowl away.  But, stocks took a mild breather off 0.4% or so, while gold was run all the way back to support at $1685 in under six hours.

Silver’s rally from yesterday and the rest of last week was wiped out in literally minutes.  Of course, this was the last day before the delivery period would start so the raid had to come today or there would be blood in the aisles at JPMorgan.   Jesse’s Cafe has the lowdown:

I have seen reports that 225 million ounces of paper silver were dumped on the Comex in less than thirty minutes.

The last time I checked there were less than 35 million ounces of silver registered with the dealers for delivery in at the Comex.

First day notice is when holders of paper futures give notice to the exchange that they intend to take delivery the silver claims they hold from the Comex warehouse. The amount of paper held is multiples of the bullion that can be delivered at current prices.

Remember folks, it’s not what they say that’s important, it’s what they do, and the Fed is printing money.  All of the monetary statistics are rising.  The base money supply in the U.S. is expanding at a 35.9% clip in the past month. M2 is rising at nearly 10% a year, 12% in the past month.

Oil didn’t sell off, copper didn’t sell off, only gold and silver.  The markets were over-extended. Yeah, pull the other leg, it plays “Jingle Bells.”