GOLDEN MADNESS!!!!!

GOOOOOOOOOOOLLLLLLDDD!!!

Okay, when I said trends would "pause" here, I might have thought a little deeper about gold, but then again I wasn't really expecting the existential threat to Western finance to come, you know, yesterday. That was a little sudden.

And although I had read the lunacy , that was starting go come out of the gold-crazy goldbugs, I didn't count on panic buying of gold to strike quite so hard.

Here is the chart of value of the dollar in that past couple days, showing DOLLAR SHORTAGE maintaining the price even in the face of total turmoil in the American financial system, and some Treasury bonds at rates not seen since World War 2:

: And here is the gold chart over the same period showing the GOLDEN MADNESS striking the markets today.

And here is the sequence as it is now becoming clear:

1) Lehman Brothers cracked open the stinking crypt of its books over the weekend and a horde of financial zombies leapt out and ATE WALL STREET'S BRAINS:

2) The WORLD saw that the Western Capital Markets were held in place by a rotten spiderweb called AIG and that AIG was failing.


3) They panic and Money-Market Rates Double Amid Global Credit Seizure (Bloomberg):

"I have never seen anything remotely like this. The money market was typically the one thing that always worked,'' said Luca Jellinek, head of interest-rate strategy in London at Royal Bank of Scotland Group Plc. ``It's the cardiovascular system of the financial body. When this happens, it's like a heart attack.''

4) AIG was rescued by the US government, giving markets a reprieve...aahhhh. Note the cool, refresing dollar-green of this text.

5) Banks, particularly in Europe looked at their books and realized that their very solvency was now - in a very real and immediate way - under the control of the BUSH ADMINISTRATION...(note here the alarming redness signifying possible shortage of dollars at the hands of laissez-faire idiots).

6) People went insane with panic and started to buy gold. [text color self-explanatory]

7) Goldbugs (and the venal, fiat-money-loving commodity traders who prey on their ignorance) went insane with happiness because it was the end of the world they had been predicting for so long had finally come and decided to buy, buy, buy.

I'm not a trader, but my thesis on these pages relies on their psychology. They will never try to "fight the tape" when it comes to madness like this - for good reason. If gold breaks out of the anti-bubble that major traded futures are in versus the dollar - or indeed any major commodities do - there is just as much of a possibility of another bubble as anything else. I doubt that it's happened yet, but it's possible.

If I sound dubious of my own words, see my post "It Begins" as an insight to bubble-market psychology. Bubble markets are an incredibly persuasive force, by definition. It's amazing. I know what I believe and yet the power of all this social energy works on my mind just as it works on everyone involved - although I'm not really involved.

May you live in interesting times