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This was added on 5/6/11

As noted in a link above, the dollar has continued to drop in recent weeks and gold has continued to go up - and so has silver.  In fact, silver has gone up a lot more than gold - probably because gold has gone up so much itself that a lot of people could not afford it anymore - and so much so that silver actually went exponential, going fully exponential about a week ago.  The exponential was fully evident on the chart by close of trading last Friday, a week ago. 

As I stated near the bottom of the link above, "I suspect that the more the system gets stretched to the limit before it pops - the more the gun is cocked before the system blows in the other direction - the more sudden and dramatic the explosion in the other direction will be (stock and bond market down, dollar up) when the time comes."

Well, silver certainly was stretched absolutely to the limit - going fully exponential.  That meant that a big fall was inevitable - and soon.  It happened this week - the drop started on Monday and silver lost 25% in just one week!  Absolutely classic - and also absolutely classic that it fell a lot faster than it rose.  The rise in silver is almost certainly over, it has probably dropped enough that one can consider the entire rise over, rather than this just being a deep correction on the way up (which really can't happen anyway, for this long, on the truly vertical part of the rise - silver had gone truly vertical by the end of last week - considering how long silver took to go up into the exponential, which was only a few weeks). 

Gold dropped in sympathy with silver - a lot.  Gold did not go up nearly as much as silver - so it did not come down as much, either, relative to how much it had gone up - but it has certainly dropped a lot, too.  I suspect this is it for gold, as well. 

And the dollar had its biggest up-move in a couple of years in the last couple of days - I suspect that is the beginning of the big up-move that I have been expecting.  We will see. 

One reason I suspect this is because the stock market started coming down on Monday, too - and kept going, and the rise on Friday was mostly eaten up by the close on Friday again, in other words, so far, that rise is just a small upward correction on the way down. 

And oil took a big hit, too, yesterday - it came down about $10/barrel in just one day. 

So yesterday looks like it was a big reversal day - and it looks like this week was a big reversal week overall. 

It looks like a big turn - we will have to see, there have been some other pretty wild days in recent times as well, but not in so many markets at once. 

So I suspect that the big turn that I have been anticipating is underway - and wild it was, indeed (as I noted, at the link above, that I expected), in multiple markets, with the markets that had gone up the most the fastest taking the biggest hits. 

I still claim that since our money supply comes through the banks - it is borrowed money (and most of our money is not even cash, it is electronic entries that are never going to turn into cash, the money just gets passed around via debit cards) - that loan defaults will eventually overwhelm the system and cause the value of the dollar to go way up for the time being. 

I think I may have gotten some evidence of the setup for this in the news today - not that this news surprised me, it didn't at all, but it was an interesting confirmation.  Apartment vacancies are going down more and more - and are very tight in places in the meantime.  The reason was even explicitly stated as foreclosed people having to move back into rent - as I explicitly point out elsewhere on this website, someone who has lost their home to foreclosure cannot buy another home anytime soon.  They have to move into rent. 

As I note elsewhere on this website, foreclosures continue apace.  The problem for the banking system is that a defaulted home loan is by far the biggest kind of loan that they can lose money on - the system takes by far the biggest single hit from home foreclosures.  And that is why the credit crunch persists - and so it is my claim that we are not out of the woods yet at all and another big downturn is to come.  We may well just have had the big turn in the markets to start us into that - but the markets have not, overall, yet gone far enough in the other direction to confirm that.  But usually if a market exponential reverses, that is it - and silver just did that. 

There has been one exception in recent memory with regard to exponentials - the stock market exponential in 2000.  It came down the way it should have all right - but since a non-recession economy goes with a stock market that is not down too much (at least, not down too much for too long), it was imperative that the Fed get it back up, and up a lot, since the decision had been made to continue to enforce the law against recessions that had expired in 2000.  The Fed did so - and even got it up to a new high in the end, a few years later, resulting in a bear market corrective pattern called a flat.  But the market came back down from that when I expected it to happen - and in the process the Fed lost control, as I expected the Fed would under the circumstances.  And so we are now in a position where even that success by the Fed does not mean much, it has not regained full control of the economy, as I knew it wouldn't, and so it is just a matter of time before the next big downturn hits, and since the economy is saturated with debt, I expect that to result in huge losses for the banks, which will result in a major decrease in the money supply - and since increases in the money supply are fed into the system by way of the banks (to be loaned out), major defaults will decrease the money supply in a big way, which will result in a deflationary depression. 

With regard to exponentials, since keeping the economy going does not directly depend on the price of silver (most people don't pay attention to the price of silver anyway), the Fed does not care about the exponential in the price of silver or keeping the price of silver propped up (probably quite the opposite, actually), and so the Fed will not work to prop up that price.  The only price it propped up was the price of the stock market - and it continues to work at doing that, but it has already failed at that once in the last couple of years, and it will fail again.