The more things change, the more they stay the same. Yes, there’s some concern that the nation will default but by now most know the drill. The debt ceiling will be raised just like it has umpteen times before. Each political party will claim victory and they stood up for America. There will be promises to cut this and that but we all know the drill by now.

Sadly, we did experience something different this time – a total lack of leadership. For me, I saw spoil little children who put on an act so they can continue doing what they like doing best – impersonating true leaders.

Put away your tin-foil hats for now and know the can will be kicked down the road yet again, but realize before its too late that the day the can will be too big to kick is not far away.

U.S. Stock Market – Unless I’m wrong and the can somehow became too hard to kick, the “Don’t Worry, Be Happy” crowd on Wall Street shall spin it and say a healthy correction has occurred and stocks are attractive yet again.

I do want to note that today is a very important one for FED watchers. Dallas Fed President Richard Fischer speaks at 8:30 a.m. Eastern, New York Fed’s William Dudley at 9:15 a.m., Fed Gov. Jeremy Stein at 9:30 a.m., Richmond Fed’s Jeffrey Lacker at 12:30 p.m. and Minneapolis Fed President Narayana Kocherlakota at 1:45 p.m. I think we shall see by day’s end that the magical “Tapering” has been put on the shelf.

U.S. Bonds – I said several weeks ago that the 3% yield on the 10yr. T-Bond would mark the high point on yield for the year. They remain a total avoid and those who still find themselves over-weighted in bonds should use this period to lighten up.

Gold and Silver – The CFTC announcement was all the manipulators wanted to hear. If we thought we seen unimaginable sell orders at the worst possible time if someone or group was truly in need of selling – just wait. The only good news is the physical market shall overwhelm the paper-hangers someday (I just hope I live to see it). Hard to see it but both metals are base-building

U.S. Dollar – It’s nearing major support levels and unless the can is truly stuck, I don’t look for support to be broken at this point. But we shall watch the bounce off support and I suspect it shall be weak and in the 1^st quarter of 2014 it shall be broken to the downside.

Mining and Exploration Shares – For those who had hope for a miracle new bull market – sorry. This industry has been heavily damaged and at the very least its many months before it can be well enough again to sustain any real advance. The rest of 2013 shall be a period when those who remain financially and mentally beaten up shall seek relief by casting away their shares. The hope is there shall be enough new interest to soak it up without going much lower. Hey, I hope so along with seeing Santa on my rooftop.

Last hope for NY Giants – I visited their bench last night and prayed heavily.

WEDNESDAY morning in London saw gold recover half of yesterday’s $50 plunge per ounce, rising back above $1300 as world stock markets slipped and the US government shutdown spread to new departments.

Commodities also recovered, and government bonds extended their gains, pushing US interest rates down to 2.62% on 10-year debt.

Euro investors saw gold recover less sharply, as the single currency jumped – and Italian bonds gained – after Rome’s coalition government won a vote of confidence against former prime minister and convicted criminal Silvio Berlusconi.

The European Central Bank today kept its main interest rate at 0.5%.

Rising from near two-month lows today, gold will move to $1405 per ounce by November next year, according to the average forecast from delegates at this week’s London Bullion Market Association conference in Rome, which ended Tuesday.

The best-attended LBMA annual conference to date, its final session saw 4 leading figures from the bullion market agree that $1050 per ounce is a “key level” for gold.

“Technically it’s a good floor,” said Marwan Shakarchi, chairman of refining group MKS Switzerland.

Prices at $1050 are also, he noted, where the Reserve Bank of India bought 200 tonnes of gold from the IMF in late 2009 – a move announced during the LBMA’s conference, then in Edinburgh.

“Believe me,” Shakarchi said, “the RBI technocrats will have analyzed every angle” before deciding to buy gold at that level “as insurance”.

“The RBI didn’t take that decision lightly,” agreed independent analyst Andy Smith. “And they really do know a thing or two about gold.”

“It’s a good call,” agreed Jeremy East of Standard Chartered Bank and Philip Klapwijk, formerly GFMS and now running boutique consultancy Precious Metals Insights. But prices need to reach that level, the panel also agreed, to “clear out weak longs” from gold investments before a new bull phase can begin.

“One reason for pessimism short-term,” said Klapwijk, “is that the surplus [of total supply over jewelry demand] remains high historically. Gold needs to fall further to narrow the gap.”

On his forecast, 2013 will see net gold investment worldwide fall dramatically from 2012 to $40 billion – “close to pre-financial crisis levels.”

Elsewhere today, the shutdown spread across US government departments spread as the $17 trillion debt-ceiling drew nearer.

“There are no other legal and prudent options to extend the nation’s borrowing authority,” said Treasury secretary Jack Lew on Tuesday, again urging lawmakers to end the shutdown and avoid a possible US default on its debt repayments and spending by raising the debt ceiling limit.

Speaking at the LBMA conference’s debate on gold Tuesday, “Detroit is not an outlier,” said Andy Smith.

Defaulting today on $600 million of debt due for repayment, “The city has only half the debt per head of the US national average,” Smith noted, comparing the devalued Dollar to the debasement of ancient Rome’s currency, the Denarius.

“Can you imagine what would happen if the Fed sold what it’s bought?” said Smith, noting the US Federal Reserve’s vote last week not to “taper” its current $85bn of government purchases each month.

As the Fed’s Treasury bond holdings come due, said Smith, “It will be called one arm of government forgiving another. But it will in fact be one giant step close to Weimar [hyperinflation].”

Adrian Ash

BullionVault

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Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can fully allocated bullion already vaulted in your choice of London, New York, Singapore, Toronto or Zurich for just 0.5% commission.

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