The failure of the Swiss referendum to repatriate gold was somehow used as the catalyst to hammer gold, silver, oil, and copper…each of them a signature bell-weather for economic activity.
I was ready to write this piece titled "Deflation Wins!" but that would have been the on-line equivalent of "Dewey Wins!" because just as Dewey actually lost to Truman, each of the four substances listed bounced back hard after their initial pummeling.
If they hadn't I was ready to make the call – the next punishing round of deflation was upon us, and it was going to be in the likeness of 2008, only worse.
One of our ideas around here has been that in order for the Fed, et al., to go even further in their insane monetary experiment, they would need political cover to do so. A nice, fat, punishing round of deflation that threatened their precious paper markets would do the trick and provide that cover.
Does this mark a bottom for gold, silver, copper and oil? It's hard to say but from a technical perspective the charts are quite bullish right now for gold particularly, and to lesser degrees for silver, copper and oil.
If it does not mark a bottom, and the world's deflationary tendencies towards low (if not negative) growth win out, then there's a very strong chance of a very ugly global recession before us.
Gold and Silver
The case for gold is easy enough to make in the charts. It's got a couple of trend lines to jump over, and was stopped at the lower one today, but the massive green candle (circled in purple) is what's called a bullish engulfing because both its lows and highs swallow the prior red candle.
by buzztatom 
