"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


Thursday, January 5, 2012

Gold proving to be very resilient

Considering the very strong rally in the US Dollar today, a generally weak or lackluster showing in the equities, a sinking Euro and a rather comatose bond market, one would expect the selling malaise that has gripped many of the commodity markets in today's session to be making an impact on the gold market. Instead, the yellow metal is showing signs that investors/traders are looking at it as a safe haven that got undervalued and is now a good place into which to store some wealth while trying to get a handle on the mess called the Global economic situation.

The incompetent bunglers (aka hedge funds), which came out buying everything in sight to start off the New Year have been mostly in the process of throwing all of that stuff away over the last two days proving that the advent of the New Year has not seen an improvement in the intelligence of that pack of pathetic traders. Seriously, this current crop of hedge funds contains some of the most ignorant and unskilled traders that I have ever personally witnessed over my entire two decades+ trading career.  They seem to know little if anything about nibbling on markets or being cautious and scaling back in size. It is either, "All in" or "All out". Massive amounts of money are slingshotted into everything and then promptly jettisoned out. It seems to me that the only people making money in that environment are the brokers, who must love the commissions and the exchanges which are revelling in the huge fees that this constant churning is creating.

That brings us to gold, which has been able to hold very firmly above the $1,600 level. The longer it does, the more confident traders are becoming that the bottom is in and that the next trending move will be to the upside.

You will notice on the chart that the market has run right back up into the initial resistance level detailed near and just above the $1,620 level. Forays in price the last two trading days have seen any dips below $1,600 immediately attract buying which has taken price promptly back avove that level. The result is that some shorts are getting nervous and are beginning to cover. If the bulls can now mount a close above today's session high, it seems we are going to get a move towards psychological resistance at $1,650 with the potential to charge towards the second resistance line drawn in near $1670. That is where the real battle will shape up to see whether or not the stronger-handed bulls can contain it there or watch it run to $1,700.


  1. Gartman came out with a bullish call on gold. Two weeks ago, he's bearish at 1550 saying it's going to 1400. Now he's bullish at 1625. The guy has become as much of a contrarian indicator as Whitney Tilson.

    I believe this rally was at least partially inspired by the Gartman zombies. Silver hit major resistance at 29.40. If S&P does the deed this Friday, and the cartel is retrenching for a massive bear raid as I expect, it's gonna go lower.


  2. very resilent.

    i've heard indian and asian buying thinking the bottom (maybe forever) is in a coupla times on one of tvs on in here from the talking heads.

    can't help thinking we'll see 1450 in the feb. doldrums before ben is made to overtly instead of covertly---> print.

  3. Dan, you said ..."Seriously, this current crop of hedge funds contains some of the most ignorant and unskilled traders that I have ever personally witnessed over my entire two decades+ trading career. They seem to know little if anything about nibbling on markets or being cautious and scaling back in size. It is either, "All in" or "All out"."

    So much for going out strong if they, the traders, are that completely stupid.

    I'll go sit in the corner now ;-)

  4. Gold has dropped out of favor in India - at least in November/December. U.S. eagle coin sales fell off a cliff too in that same timeframe.


    I'm in agreement with Turd. I think the cartel has something up it's sleave for S&P Friday - something traders seem to have completely forgotten about, and others are mistakingly perceived as being "priced in" to the market. Could be 100% wrong though. As Dan points out, the action today was bullish. There is no denying that. But is it a bull trap , or the real deal?

  5. To answer my own question - I think a close above 1750 US/oz - the high of Dec 1st - would make me think that an all clear signal is given for a resumption of the uptrend. Prices would probably muddle around for a few days at that level to make people doubt the trend.
    I had a thought last night. And what if gold broke out to the upside in euros? Most people would blame that on the euro itself, but I don't think that is the point. If gold breaks out versus the euro - that takes out one of the big players in the group of central banks trying to reduce the attractiveness of gold as an appreciating asset - leaving more heavy lifting for the others. Containment becomes much more difficult.

  6. On going currency debasement by the world central banks has finally had a major consequence. Today, June 5, 2011, was a pivotal day in financial history, as all forms of fiat wealth, that is currencies, stocks, commodities, and bonds, turned lower in value, while the chart of the gold ETF, GLD, shows an increased in value. Bad central bank credit policies have destabilized all fiat financial instruments, especially global financials, IXG, and world treasury bonds, BWX. Diktat is rising as a form of money, which is driving the world into regionalization for security and stability. A Global Eurasia war will be waged in Syria and Iran.

    Fears of sovereign insolvency and banking insolvency turned currencies, stocks, commodities, and bonds lower today.

    World Currencies and Emerging Market Currencies traded lower.

    The trade lower in Germany’s Deutsche Bank, and Spain’s Banco Santander, lead European Financials, lower, which turned World Financials, lower. Spain, Italy, and lead Europe, lower.

    Falling currencies turned the world’s mining stocks and the world’s mining and steel ETFs lower. Energy stocks also turned lower today. Natural resource investing became more unprofitable due to falling currency values. Debt deflation and exhaustion of central bank credit, is causing an unwinding of carry trade investment and stimulating derisking out of natural resource stocks worldwide.

    It is the world central banks’ bad credit policies that are making money bad -- Bad money is destabilizing the world economically and politically. The investment, political and economic tectonic plates are shifting, and an authoritarian tsunami is on the way.

    Seigniorage, that is moneyness, will no longer come from banking and national governments, but rather come from the diktat of regional sovereigns. Currencies are now sinking, and global financial derisking and deleveraging is underway, with the result that the new dynamo of diktat is driving economic and political action. Political capital is replacing investment capital. The seigniorage of fiat money, is being replaced by the seigniorage of diktat.

    Regional global governance is rising to replace sovereign nation states, as nations loose their debt sovereignty. This is foretold in bible prophecy of Revelation 13:1-4 and Daniel 2:31-33. Life in the Euro zone will be characterised by collectivism, as statism rises to govern all.

    The only way to preserve wealth is to buy and take possessoin of gold bullion

  7. Hi Dan,
    To me, a pull back towards 1665 is likely, as it is a pullback towards the main long term daily support that everyone was probably following, i.e the ma 150 daily.

    Pullback towards an older support is very frequent, and to me it is now a resistance. Only if gold goes through that level, I'll reconsider my position. Meanwhile, I'll sell a bit of gold at that level and see if I can buy it back later somewhere down.
    Kind regards,

  8. boatman, yeah. I've seen similar talk of $1,450. Heard it this morning on CNBC for that matter. But than that is MSM. I think a lot of people would like to see it that low again so that they could enter in and load up, but I have some doubts that it will go that low again. Time will tell, of course.

  9. Evening Dan and Happy New year to you sir. I would like to share a video here with your viewer. Thank you Dan

    Ron Paul's 2002 Predictions All Come True


  10. I never see Dan on Sinclair's website. They probably had a "spat."

  11. Robert - I am there every Saturday morning with a link to my KWN Metals Wrap. I just post my stuff over at my site instead of duplicating it over at Jim's.


Note: Only a member of this blog may post a comment.