PM Update

Its like watching the three stooges, i'm talking about the Greek fiasco. Pappa Dre (also known as Papandreou) gets slapped on the head by Sarkozy and Merckel and is now basically taken to the woodshed. Marketwatch is reporting that Pappa Dre is going to step down. “The prime minister said that this government is going to pass on power to another government, which he will not lead,” an unnamed official who was in the meeting told the paper. Earlier reports had said a new government could be led by Finance Minister Evangelos Venizelos. On Saturday, Papandreou briefed Papoulias on his plan for a multi-party government that would implement the rescue package devised by European leaders late last month, the Journal said.

As I have said before derivatives and massive debt is the cancer they are trying to treat with penicillin. Austerity measures would have be an utter disaster. Applying austerity measures in Greece would just  lower capital utilisation and productivity and reduce tax revenues thus making it harder for government and its municipalities to balance their books. Debt levels must be inflated away or written off (also read post on Financial Repression).

So more QE is coming and that should be good for most asset classes.

Looking at the chart, we had massive gap down (the deflation scare), went sideways, broke out (filled the gap) and we also have tested that break-out (referendum scare that got bitch slapped). And we are back to the upper end of that range (somewhat ugly bull flag). But the news is good we have an extremely bullish COT report low level of commercial shorts to large and small specs.

 The gold chart is absolutely gorgeous we will be making news highs. Above the 20dma, it never broke its long-term up trend and is breaking out again, again the news and the COT's are bullish.

I'm using GLD and SLV only for demonstration purposes. Buy the metal, the paper will be inflated away as they kick the can further down the road. 

Short-term target for silver, 40 in 2 weeks or less, the faster it takes out 35.50 the faster we get there.

Short-term target for gold, 1900 in 2 weeks or less, probably less.

Caveat: The bozos in Europe can't get together and make a deal happen.