"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


Wednesday, February 1, 2012

Gold Chart

Gold bulls breached resistance at $1750 but have been unable to keep the market ABOVE that price. That will be necessary for them to set up a run towards $1775- $1780 where a major upside resistance level is located.

There is a bit of weakness in Euro Gold today which is coming off of the rather large rally in the Euro in today's session. That rally sent the Dollar down below critical support at the 79 level on the USDX but that market has rebounded back above 79 thus far. A close below 78.80 should set the Dollar up for a drop towards 78.

It is indeed fascinating to watch this shifting back and forth between risk trades and risk aversion trades as one headline after another takes precedence in the minds of traders. Today, European debt fears have temporarilty taken a back seat and that has allowed Dollar bears to pressure the market. It has also sent the long bond careening lower off the top of that three month trading range that I mentioned in yesterday's comments.

Crude oil weakness is limiting the CCI and preventing it from pushing up to 600 in spite of the sharp fall in the Dollar. Natural gas, after giving us all a big head fake higher last week, has resumed moving lower and is once again threatening to close in on that major low made on the day that Chesapeake announced some production cuts. If the market fails there, we could see nat gas moving all the way to 2.00. This warm winter combined with huge storage overhang, it giving consumers one helluva deal on their heating needs this year and will likely do so for cooling needs this summer at this point unless we see some serious cuts on the supply side.

Copper continues floating higher on this sea of liquidity but will need to something on the demand side due to economic activity to push through $4.00. Right now it is all speculative interest playing it from the long side due to the zero interest rate environment. In other words, the Fed's gambit will result in higher costs for electrical wiring for homebuilders and other manufacturing interests down the road. In this sort of free money environment, it is very difficult to gauge how much of the "demand" coming into these markets is genuinely due to demand for the physical product versus demand coming from hot money chasing risk assets. The danger comes when or if the latter demand source dries up due to some extraneous event setting up the real possibility of extremely sharp drops in price as this hot money goes washing out of the market en masse.


  1. I'm not a regular poster here but a frequent reader. Thank you for your blog and insights. I really appreciate your expertise in the markets.

  2. 15,000 AMR jobs perhaps to be lost. Coming into Friday's job figures, that doesn't make for good news. As you have nicely shown on the ten year bond chart yesterday, how much more can you expect? At some point the "safe haven" aspect may come into question for US bonds.
    It used to be a given in the stock market calendar, that at the end of the month, and first four days of the new month stocks do well as the new money comes pouring in. I don't have that "feel" with this present market. How many more things do you want lined up in their favour: ultra low interest rates, a Fed promising more money - and as Jim Sinclair says an event coming from the ISDA taking Greece off the front pages, a strong US dollar attracting capital but not too strong to be uncompetitive, saber rattling in the Gulf, European problems scaring money away from Europe. Sure looks like a tired market to me.
    Effectively the official gold price today: 42,100 Euros per kilo. So more grinding to do until the catalyst comes along to send gold higher, or more waiting - but keep in mind - you can't hold a good man down.

  3. (MOTS)...More of the same. I feel like we are in a washing machine with a cycle that continues to go "off...on....off...on...off...on". It is too exhausting. I put in some $ in miners and I am just going to ignore everything for awhile. Too freaking exhausting. This market is termed "CONTROLLED" financial repression with a depressionary economy. It will remain this way until the Banker/Govt Cartel finally lose. You cannot ever anticipate anything, just risk on, risk off. I interviewed last year with a large govt sponsored BOA forced owned Investment Bank. One VP advised me that the discount internet stock trading platforms were "ALMOST DEAD" allowing them the monopoly of old..LOL. Then the sure fire 30 SVP, did not like a thing I said. No job for me. Anyhow, maybe her job is now gone after the BOA change in management. I kind of hope so. Let these freaking controlling buttheads finally take their controlling medicine and go away.

  4. The lack of spec action in gold and silver today was sickening. The cartel pretty much pushed it around at will. That's pretty much been the story, except a few days here and there. Cartel allowing PM's to go up with the general markets.

    Seems like platinum is where the party is at. On the next major pullback, I'm going to checkout platinum trading vehicles.

  5. LOL. It was comical watching the tape today. They had the bots on all day today right at 1750. If some spec is willing to step up and push it up to 1755 on stronger volume, we can overtake the bots. Otherwise, it's trader heaven trading around the bots, at least until somebody with some balls is willing to take out resistance.


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