“Woe to the land whose king is a child and whose leaders are already drunk in the morning. Happy the land whose king is a nobleman, and whose leaders work hard before they feast and drink, and then only to strengthen themselves for the tasks ahead”. (Eccl 10: 16-17)


"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat


Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


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Friday, September 9, 2011

Swissie Gold and Euro Gold setting all time highs

US based analysts continue to approach the gold market with blinders on as they focus exclusively on the US Dollar price of Gold and draw all their views of the market from that perspective. An apt comparison would be looking at the Dollar price of RICE and extrapolating future price action for the global price of this international food without even considering its price in Japan or Malaysia for example. This is shortsighted at least and foolish at worst as it betrays a flawed understanding of the role of gold in the international arena and its function as the currency of last resort.

With the vast majority of Central Banks around the world embarking on policies and practices designed to deliberately debase their respective currencies, those investors around the globe seeking to protect their wealth from such depradations are buying gold. That is why it continues to make one new high after another across a variety of global currencies.

Consider the price of Gold in Swiss Francs or "Swissie Gold". Ever since the SNB decided to debauch their currency and kill its historic safe haven status, gold has been soaring in terms of the Franc. Do you think that those Swiss who are financially savvy were going to sit idly by while their Central Bank plundered  and looted their wealth?


Or consider the chart of Euro Gold, Gold priced in terms of the Euro. It too is making one new all time high after another. It is responding to the circus in Europe as the monetary authorities and political leaders there provide living testimony why one should not "put their trust in princes". The resignation of the ECB's Stark is yet another straw on that camel's back.



Think citizens in Britain have any more confidence in their leaders than the rest of the Euro Zone? Guess again!



Judging from the price action of the US equity markets this morning, the investing community has as much confidence in the Obama Administration's efforts to create jobs and turn the economy around as the passengers and crew of the Titanic had in their captain to save them from their collision with that  enormous iceburg. This is the reason that while the Central Bank attack on gold continues, they have not been successful in derailing it. No one trusts the hapless clods to fix anything.

Do you get the distinct impression that there seems to be a rising lack of confidence across most of the globe in their respective governments?  Personally I shudder to think where the S&P 500 would be without the surreptitious buying of the Exchange Stabilization Fund.


Considering the debacle unfolding in the equity markets today, the HUI or mining shares index, is once again holding remarkably firm as this sector contines to outperform the rest of the broad market.


Not surprisingly, the US Dollar has become the safe haven currency for the time being not based on any merits of its own, but only because the alternatives are even worse. It is attempting an upside breakout above a key chart level in today's session would which confirm a bottom is in for the intermediate term as it flirts with the 25% Fibonacci retracement level from the decline that began last May. It still looks like a rally in an ongoing bear market however. It could push as high as 79 - 80 on this leg if it sees some follow through gains next week but I frankly would dismiss any long term sustained strength unless it could convincingly clear the 81 level.


In the meantime this Dollar strength is engendering selling in the commodity complex by the hedgie algorithms once again. This is where some of the pressure in SILVER is coming from today. For the time being, the slowing global economic growth theme is currently outweighing the fears of currency debauchment when it comes to commodity pricing.

22 comments:

  1. thx Dan...always informative and intelligent...have a good weekend...

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  2. Dan,

    3 posts in 2 days? No complaints sir. Thanks for the comprehensive view of things.

    Ta,

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  3. Sanity in an insane world - Thank you Dan!

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  4. You've certainly got their number Dan and can see just what they are up to.

    Good weekend mate.

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  5. "No one trusts the hapless clods to fix anything." Thanks Dan, you're a treasure. Looking forward to the KWN Weekly Metals Wrap tomorrow.

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  6. "It [US dollar] still looks like a rally in an ongoing bear market however. It could push as high as 79 - 80 on this leg if it sees some follow through gains next week but I frankly would dismiss any long term sustained strength unless it could convincingly clear the 81 level."

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    Dan,

    Your thinking is at least 10 years out-of-date. A falling dollar is no longer a bad thing, and a rising dollar is no longer a good thing. If the dollar resumes its bear market, that means the world economy is getting better.

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  7. I think the action in DX this week is not to be dismissed lightly, huge game changer

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  8. Unknown:

    Thank you for informing me and letting me know how ignorant I am. These days it is always refreshing to have wisdom bestowed upon me by such luminaries as yourself. I am sure I am a much better person as a result of your keen insight into such matters.

    ReplyDelete
  9. Quote:
    This is the reason that while the Central Bank attack on gold continues, they have not been successful in derailing it. No one trusts the hapless clods to fix anything.

    Could not of said it batter, yes with an "a".

    I picked up on the idea of government not fixing anything a few months ago, sorry I am late to the party, but I am in it now.

    Thanks Dan for putting your heart in soul in your blog.

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  10. Trader Dan said...
    Unknown:

    "Thank you for informing me and letting me know how ignorant I am. These days it is always refreshing to have wisdom bestowed upon me by such luminaries as yourself. I am sure I am a much better person as a result of your keen insight into such matters."

    One in every crowd, Dan.

    Silver's bin messin' with my head alittle bit recently, though. It must be suffering a true identity crisis much like the investors that buy it. Either it's currency or it's not. Either they're investors or they're jokers. How does the investment community flipfop from one day to the next as to it's definition? It's still cheaper than gold. How can it not be viewed as a currency along side it's big gold brother? The more I try and learn about investing, the less I understand.

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  11. Did anyone else think he looked alot like a Barker at a Carnival last night. Even a non conformist like myself, I felt a little pity. I mean "is this what we are coming to" ? Get your 1)tax breaks here. Yo! Hot Long term unemployment benefits!! Jobs for infrastrucure Right away!! Get yer hotcakes..or a medicine man with the codeine bottle fresh off the truck.
    Kitco's Nadler commented on a Market Watch talking point we were to see some more CME margin hikes. If they attempt to time it correctly it could work out for the short term. Just like everything else. The Stark news is the crater which formed from the crack started when the Euro was formed. Just marking time. Have to buy a few more mining shares out of the money market $ for more insurance.

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  12. Your thinking is at least 10 years out-of-date. A falling dollar is no longer a bad thing, and a rising dollar is no longer a good thing. If the dollar resumes its bear market, that means the world economy is getting better.

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    HA HA HA HA HA HA Sorry Dan, But I loath stupid, and have to chuckle at it when the opportunity arrives.

    Great post Dan thank you

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  13. i hacked unknown!!!!!---he's liesman n hargrove n sorkin on a 'heater' break.....oooh, and krugman was on the phone to them from the temple mount.

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  14. Dear Dan! Thanks a lot for your brilliant information! İ check several times a day your blog, and if İ dont see a new post, İ got disappointed. You, and your friends:JS, KWN,Mounty Guild and others have enlightened me to a great extent.

    Regarding the gold, İ think despite all the games theres is very simple logic behind the price: rally-consolidation-rally-consolidation- ... İ think this cycle will cntinue at least a few years, so better is to buy and hold and enjoy life:)

    Finally, İ want to ask what charting software you use, and how İ can get it?

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  15. A proofreading note: the Swiss Franc/Gold chart is posted twice, instead of the Euro/Gold.

    Thank you for your insights. This is a terrific blog, one of the most informative anywhere.

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  16. Castanea_d

    Thanks for pointing out my screw up on that chart. I have put the correct one into place. Sorry about the foul-up!

    I also am grateful for the very kind words.

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  17. Elchin;

    I use both Esignal and Metastock for charting purposes. Most of the charts that you see here are created by Esignal as that is my primary app but on occasion I will use some that I create in Metastock, which is also an excellent technical analysis software app.

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  18. Thank you for your words of wisdom Dan.

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  19. Thanks a lot Dan, İ will try them out..

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  20. "the slowing global economic growth theme vs. fears of currency debauchment"... this goes a long way in helping explain silver's behavior some days.

    Merci Dan!

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  21. KWN Weekly Metals Wrap

    KWN Metals Wrap is up! Also check the news on Peter Schiff at The News UNIT

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  22. Hi Dan,
    Thank's for the very detailed informations.
    I just want to ask, would it make sense to keep an account in swiss francs ? or would it be better to keep my cash in another currency ?
    Thank you in advance for your recommendations

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