"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


Friday, February 3, 2012

Gold Bulls unable to break through resistance

Today's payrolls number, something which I might add is more akin to an Alice in Wonderland creation, was the factor responsible for the selling in both gold and in silver. The thinking was that if the economy is gathering steam at such a fast clip as the numbers suggest, then any notion of additional QE3 is a pipe dream. That means no Dollar debasement and little to fear on the inflation front so out came the sellers in the gold market. It also did not help the bullish cause that the market failed at a critical technical resistance level.

Between the two developments, longs who have had a nice run lately, decided to go ahead and take the profits while they were still there and wait for a better buy back in point. Short sellers looking for a top were also emboldened and made their presence felt as they have been on their heels lately due to the strong buying present in that pit.

The Euro gold chart also retreated from levels near its all time high so it looks like we have some confirmation from two different charts that a retracement is occuring. We will now wait to see where dip buying emerges and how much lower the shorts can press it.

Remember that copper chart that I posted yesterday noting the stall in upward momentum just short of the $4.00 level. Goodness - it looks like a veritable orgy of buying occurred in that pit today as copper put on a ridiculous 3%+. I am not sure who in their right mind wants to chase copper higher at these levels but with the hedge funds loading up on the red metal, that sort of thing does not matter much. I find it difficult to envision a rally in copper based off a payrolls number that is highly suspect when one digs below the headline number but who cares when the hedge funds algos start eating up all the offers.


  1. Hi Dan,

    Thanks for your analysis. Unless gold closes above 1759.3, we're looking at a "key outside reversal day". Similar to August 23rd? Think there's any reason for us bulls to worry?


  2. Dan said" The thinking was that if the economy is gathering steam at such a fast clip as the numbers suggest, then any notion of additional QE3 is a pipe dream. That means no Dollar debasement and little to fear on the inflation"


  3. I just want to make a comment about 2 gold stocks that I own. I have been with you since the beginning and on jsmineset from the beginning. I dont often comment, but your work is outstanding. I trade mostly gold but have a few gold stocks and the only thing I want to say about that trade is that it is pathetic. Maybe the companies are hiding something, stealing all the money or have hedged all the gold they will produce at 1000 an ounce forever. Otherwise, I am now going to say that it is not worth trading them. If I am going to be frustrated, I would rather be that trading gold, where I have a good chance of making money, then in the time wasting gold stocks. And this is said from a person who believes in gold and has been long for years.

  4. a BS labor good # that argues with the ADP # which was bad does not a trend breaker make.

    1725 is the bottom of my trndline from dec 27 throwing out the pre-FED hiccup.

    i say we resume up trend from here unless someone knows something about a greek departure i don't.

  5. Dan - I think the cartel was front running a Greek weekend blowup rather than the BLSBS numbers. Yes, the first raid for sure they used the BLSBS as cover, but maybe not the second raid.

    The Government is rumored to be resigning due to lack of agreement with the troika, and I'm willing to bet the cartel has some inside dirt on events. If that comes to fruition. RISK OFF. You heard it here first. Contagion is just about the only thing that will spark fear in this market, and this would be the beginning of it.

  6. It used to be my head twisted back and forth, trying to grip some type of TREND. It worked in 2010. Does anyone remember the first "Exorcist"? That is what my head now does. It goes in a circular jerk motion all around...never stops until I can read ZEROHEDGE. Then, ahh, yes, it stops to understand the TRUTH. Dan, thanks. I was lucky again. Rode a decent 12% gain and sold 63% of the mining stocks before todays beatdown. Waiting again..holding a smidgeon and hoping to see the new beaten down bottom. When Gov and Wall Street Hedgies meet, it makes it nearly impossible to make any money unless of course the Amazing Kreskin is summoned from the DEAD. Thanks again Dan for your hard work and heads up. Your commentary gives me a great bit of relief that life continues to exist outside of the BS BLS...

  7. I cannot wait until the next reports oil inventories are sky high, Israel and Armadinnajad had high level executive meeting catered with a "roasted pig", kegs of heineken, and naked belly dancers. It is all ok on the Middle east front, move along, nothing to see here. Sorry, but it is rediculous what is being printed in the MSM, compliments of our government statisticians. Apologizing in advance Dan. It is just that my mouth is spewing the Excorcist material given the recent print from the BLS.


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