With gold and silver getting hit hard today, King World News interviewed James Turk out of Spain. When asked about the recent action Turk commented, “The last time we spoke Eric, the two key overhead resistance levels I mentioned were $1,400 for gold and $30 for silver. I expect that we will be probing those resistance levels in the near future. The real question in my mind is whether we can take out these resistance levels on the first attempt, or whether the market needs to trade sideways longer in order to build more of a base.”

Turk continues:
Regardless, the risk here is not being in the market, because once these resistance levels are taken out, both metals are ready to explode to the upside. Right now, over here in Europe, the periphery countries such as Spain and Portugal are changing the way they borrow. Their bankers are putting together a syndicate of lenders so that neither country has a failed bond auction. The net effect is not only are they trying to paper over the sovereign debt crisis, now they are trying to hide it behind closed doors with these gimmicks.

Another slight of hand which has been getting a lot of attention recently is the accounting shenanigans by the Irish central bank. The unexplained build-up of other assets on its balance sheet suggests to me that they are playing a very dangerous game. Instead of allowing Irish commercial bank assets to contract to meet the decline in deposits at those banks, the authorities are relying on accounting deception.

If the bank run on Ireland continues, which is likely, the other assets on the Irish central bank’s balance sheet will not be able to be used to obtain liquidity from the ECB, thus potentially leaving Ireland in an illiquid, precarious monetary position. Interestingly, one would expect to see these steps from a country prior to that country exiting the Euro altogether. The question then becomes, is Ireland setting up to leave the Euro?

All of these indicators are simply bullish underpinnings which are paving the way for the next leg higher in both gold and silver.”

This has been a fascinating bull/bear battle in gold and silver. The bears are making a move here, it will be interesting to see who prevails in the end.