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Not since 1971 when President Nixon lifted the US dollar off the gold standard eliminating what once was a solid foundation for the currency has the phrase "Gold Standard" being used as the front page of mainstream media news. This was the beginning and the demise for the US Dollar. The US Dollar has lost 98% of its purchasing value since this historical decision was made, risking the very foundation and integrity of what once was called the American Dream.

It is sad to say that is no longer the case. The dream has become a nightmare. The US debt has placed the US economy at the same levels as Greece or Spain which are running at approximately 75% of debt to GDP ratios. Based on historical standards this amount of debt is unsustainable.

With the US Debt approaching 16 Trillion Dollars, the interest payments alone are a major concern particularly during a recession. The crisis could create some serious consequences if interest rates begin to rise expanding the tail curve cost of the principal debt expense obligations exponentially.

Investment capital will look for alternative investments. In today's interest rate environment there are very few in the sovereign debt markets globally that make any sense to take a risk in, in a zero base interest rate mentality for any significant length of time. This will lead a massive amount of investment capital flow into precious metals.

Looking at the chart below It appears the market has made a major double bottom formation in terms of yield. This is a classical technical configuration that confirms major trend changes are taking place long term. In this case, it is confirmation that we have completed and reached the end of a historical period of time economically, as it relates to low interest rates.

With the market breaking above the descending wedge resistance of 1.60% yield, it puts into perspective the 2.4% yield target zone (61.8% Fibonacci Retracement) for the immediate future.

The fact that the yield is ascending is very negative for bond investors as the market is demanding higher yield (lower bond prices) due to the amount of risk related to US Debt obligations. This translates to risk of principal loss, if rates start moving north. Maybe the market dictating prices based on risk perception is beginning to discount the possibility that the amount of current US government debt is unsustainable, therefore demanding higher interest rates to compensate for that risk.

Let's take a closer look at the US 10 year T Note yield chart and see what the outlook is for the short end of the yield curve and interest rates.

The September US 10 Year T Note contract closed at 1.68%. The 52 week Range is: 1.43% to 3.75%.

The market closing above the daily 9, 18 and 36 day MA's on a weekly basis is confirmation the trend momentum is bullish.

The market closing below the weekly VC Weekly Price Momentum Indicator of 1.73% is confirmation the trend momentum is bearish.

Look to take some profits if long as we reach the 1.77% to 1.87% levels early next week. If stops are taken out here, we could see a sharp rally up to the 1.80% and 2.04% weekly resistance levels.

Buy corrections at the 1.63% and 1.59% levels to cover shorts and go long on a weekly reversal stop. If long use the 1.59% level as a SCO/GTC (Stop Close Only and Good Till Cancelled order).

The gold and silver markets had one of the best weeks since early June of this year for a weekly gain of more than $55 dollars per ounce for gold and a whopping $2.36 dollar per ounce weekly gain for silver.

Let's take a look at the weekly gold and silver chart technical indicators below and see what we can look forward to next week.

The December (Comex) gold contract closed at $1,673. The 52 week Range is: $1,535 - $1,934.6.

The market closing above the daily 9, 18 and 36 day MAs on a weekly basis is confirmation the trend momentum is bullish.

The market closing above the weekly VC Weekly Price Momentum Indicator of $1,654 is confirmation the trend momentum is bullish.

Look to take some profits if long as we reach the $1,697 to $1,721 levels early next week. If stops are taken out here, we could see a sharp rally up to the $1,700 and $1,725 levels weekly resistance levels.

Buy corrections at the $1,631 and $1,588 levels to cover shorts and go long on a weekly reversal stop. If long use the $1,588 level as a SCO/GTC ( Stop Close Only and Good Till Cancelled order).

The December (Comex) silver futures contract closed at $30.66. The 52 week Range is: $26.20 - $44.19.

The market closing above the daily 9, 18 and 36 day MA's on a weekly basis is confirmation the trend momentum is bullish.

The market closing above the VC Weekly Price Momentum Indicator of $29.83 is confirmation the trend is bullish.

Look to take some profits if long as we reach the $31.70 and $32.74 levels early next week. If stops are taken out here, we could see a rally up to the $34 to $35 per ounce weekly resistance levels.

Buy corrections at the $28.78 to 26.91 levels to cover shorts and go long on a reversal stop. If long use the $26.91 levels as a SCO/GTC ( Stop Close Only and Good Till Cancelled order).

Source: Weekly Gold And Silver Report For August 23, 2012: The Gold Standard And U.S. Debt

Additional disclosure: Trading in the financial markets involves significant risk of loss and is not suitable for everyone. Past performance is not necessarily indicative of future results.