Dollar cost average into gold and silver and the miners.

There is increasing evidence that gold and silver and the miners have pent up buying demand.  Social mood is changing in many ways.  People no longer trust our lying government or their jackbooted enforcers at all levels.  The only thing holding the dollar up in the long run is confidence.  The main issue with instantaneous dollar collapse, of course, is that many countries are way worse off than the US.  China is a massive, massive credit bubble and it has literally been a Chinese fire drill in the making.  Nobody knows where all of the debt skeletons are hidden but I tell you for sure that all of those new buildings in China got paid for with debt, not cash.  China is going to default on it all and it will blame the US (rightfully so IMO). 


Think about it.  Chinese people are not stupid.  In fact, their top people are every bit a good as top Americans.  They know we are running a debt Ponzi and have darned near said it many times.  But we are currently in charge of the global monetary system and so China knows it has to play by our rules.  And so it has.  And in fact, I think they have played the game pretty darned well. 

Nixon set out to make China our slaves.  We would get the output of their labor, they would get our fake green paper.  Back in 1971 China was a backward backwater with few cars, modern buildings or highways.  But when the US needed slaves to produce for us, they learned from our tech and now they are as good at it or better than we are.  They can put up buildings, skyscrapers, in an eye blink.  The Chinese government has also controlled their money supply, thus keeping the exchange rate very low and thus the price of their products very low.  I am constantly amazed at the stuff I can import from Hong Kong, especially electronics, for almost free. Example: I am doing some home automation stuff and I need relays.  If I buy the above relay board from anywhere else in the world it is $89.  But I can buy on Ebay from China, shipped through Hong Kong for $21.  Including shipping.  The Chinese government is keeping the exchange rate very low in order to keep people buying from China.

After years of doing this, it was clear that China had a good revenue stream.  It was steady and it was big.  When bankers see this, they want to tap into it by loaning that entity money.  The big revenue stream from Europe and the US meant that China would be able to make the debt payments.  In this way, it was thought, China would be made debt slave on top of being a manufacturing slave.

But I think China is playing everyone who is trying to play her.  I think China is taking all the debt on that they can, far more than will ever be repayable at the low rates that their export products sell for.  I think that China knows the global economic system is a Ponzi and that it will at some point collapse.  So why not build the crap out of the country and then just default along with everyone else?  That is what I think will happen.  Everyone think China is stupid for giving away the store in terms of manufacturing profits but their manufacturing is a diversion from what is really going on: massive, massive real estate debt that, like the US and its dollar Ponzi, they never intend to repay.

Gold and silver and miners might indeed make one more final lower low if my ending diagonal model plays out.  But after that, they will break out big time because that's what happens after an ending diagonal completes.