Today was an outstanding day for gold and silver. A surge higher in the morning followed by pullbacks to the $995 gold and $16.25 silver breakout points, successful retests of these levels, and then strong moves higher throughout the rest of the day.

Bill's commentary that the precious metals markets will divorce themselves of the equity markets is also what I'm looking for. I see subtle hints of it moving in that direction but not quite yet. We still have everything tracking the dollar in lockstep. Dollar strong = stocks, commodities, metals down. And vice versa.

I've been listening to Bob Hoye comment forever about how in a market crash, the senior currency (US Dollar) will strengthen, thus sending all the orthodox markets down. He makes it seem like these are automatic movements, i.e. stocks crash ----> resulting in dollar strength -----> resulting in everything else selling off.

However, we only need to look back at the beginning part of this bear market in stocks to see that this is not true. From October 2007 to September 2008, almost a full year, stocks and the US dollar went DOWN together. See the attached image.

Then psychology changed, and people started running toward the burning house for "perceived" safety.

This leads me to believe that Bill is right, that there is going to be some sort of psychological shift at some point, that will cause currency traders to stop buying dollars as the stock market falls. In turn, precious metals should not sell off as stocks fall. When will it happen? Who really knows. My point is that Bill's hypothesis is not impossible. It happened last year. It is just going to require that point where mass psychology shifts, and people understand that buying a currency of a country who's stock markets are imploding does not represent safety.

Hysteria