“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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Wednesday, February 15, 2012

General Comments

Gold is holding firm in today's session but has retreated from its best overnight levels. You will notice that within the larger time frame on the chart, gold has made a nice run to stiff resistance beginning near $1760 and then retreated. Buying on the downside coming in near the support level marked (close to $1720) has been extremely consistent over the last two weeks however. The result has been a constricting triangle forming which is a consolidation pattern.

Bulls cannot take it through resistance at this point but neither can the bears break it down. I happen to believe that the reason the latter cannot accomplish their intent is the reality of gold strength across a variety of other world currencies. Bluntly - the price of gold is holding in terms of all of the major currencies as savvy investors/traders are well aware of what the monetary authorities are doing to their respective currencies in order to keep the game of musical chairs, aka - the global economy - going.

Central Bankers and monetary authorities are doing what they were born to do, namely, destroy the value of their nation's currencies to benefit the big international banks within their midst. Gold is all too well aware of that and is doing what it always has done and always will do - function as a currency of last resort and a refuge from their depradations.

What we want to watch for in gold is a breach of this triangular pattern with a close preferably above the $1750 level to kick this thing up into that heavy resistance zone noted. Obviously gold bulls would want to see dips below $1720 meet with strong buying and an almost immediate return back above that heavy red line shown.


As another quick note of reference, check out the price of Gold compared to the price of the US long bond in the following chart. Note that going back to early 2009, when QEI was still in force, gold was the asset that investors favored in relation to the US bond market. After a brief dip lower in this ratio during the middle of 2010, when investors were fearful that another round of QE was not going to be forthcoming, the ratio returned in favor of gold until it peaked just after QEII expired and the Fed had nothing really significant to replace it. From that point on, bonds have been a better investment than gold.

That might possibly be changing at this point as interest rates crawl along at abnormally low levels and investors become more fearful of currency debauchment. The downtrend line in this ratio has been broken but has a bit more work to do in order to look more convincing. A move through the heavy blue line shown would do the trick.

At some point in this now multi-year game of constant liquidity doses and other quick fixes which solve nothing, investors will begin to dump bonds and move much more strongly towards gold. That will signal the beginning of the end game as the ratio will be flashing the loss of confidence in the political and monetary authorities to deal with this massive papering-over of the problem.

15 comments:

  1. And after the close, Agnico-Eagle reports their quarterly earnings. Hopefully they will have something nice to say - and perhaps give a glimmer of hope that they have found out something more about the problems at their Goldex mine.
    And then again - Jim Sinclair alluded to
    "illegal short selling" in his King World News piece - it will be interesting to see how the bank/stock analysts paint the result.

    ReplyDelete
  2. Nice vest. You'll look good in it at Obama's 2012 victory party.

    ReplyDelete
    Replies
    1. Haaaha,hhaaaa,,haaaaa....I am still laughing. Mr. Bud, if he wins, alot of us are retreating into "invisible men" going the barter route. Less tax dollars collected...deficits increase...QE becomes necessary. Cities collapse, States collapse (Exceptions will rule). Big Gov meets American muscle. Met several Seals, Special Forces guys who give their allegiance to the CONSTITUTION, not the CROMANDER N CHIEF. It will become silver and gold currencies for REAL AMERICANS. They can continue to play the FAIRNESS doctrine (Socialism). I will have property completely protected with long guns if necessary. Hey Bud, good luck at his reception. You guys have fun. haaahaaa...Haaaaa

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  3. "Only a few members of the Federal Open Market Committee favored another round of quantitative easing, or QE3, according to minutes of the last meeting released Wednesday."
    And down goes gold. Luckily we know that they are only interested in keeping gold from going up too fast.
    Someone showed me an article saying that the Fed is applying "Taylor's Rule" to the US "Long Term" bond market,
    with the end result that the interest rates of these long bonds are no longer a function of market demand, but FED monetary policy. I then thought, "Well if they can hold interest rates down as they please, then it is just a small step to try to influence corollary markets that may affect interest rates."
    As for Taylor's rule - never heard of it before.

    ReplyDelete
  4. Well Done Government....aaa.hahaaah..haaa.
    MOPE...MOTS

    More of the Same..When it finally starts to crumble..Bond markets...Iran Invasion begins...or...Iranian people starve..then the Stratis of Hormez become "crowded" and what are those new missles. Matter of time. Oils floor established.

    ReplyDelete
  5. http://www.zerohedge.com/news/who-says-government-cant-create-jobs

    ReplyDelete
  6. How about this chart...do you think BOA is going to improve much? No!! Will Buffett help...NO..He is getting a 10% coupon paymnet. It doesnt matter people. Wake up. It is over. Either get a job pay taxes or go INVISIBLE. They Federal gov just hired 17,000 new IRS Agents to do what? Get you $. Period...if you work and pay taxes they get your $$$$$$. Simple. They own us. Wake up. Mr. Buffet is a lying POS. So is Corzine. So is Mr. Freeh. They are the what the Matrix calls the System. It is simple. Either relent or agree. I am not agreeing. So GO.TO. HELL OBAMA. Take your govt bailouts, steal from the American people and GO.TO.HELL

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  7. http://finance.yahoo.com/echarts?s=BAC+Interactive#chart3:symbol=bac;range=my;indicator=sma(10,30,200);charttype=line;crosshair=on;ohlcvalues=0;logscale=off;source=undefined

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  8. It is funny. Greece is burning. Portugal, Italy, Ireland, Greece. All Pigs, who should just tell the GS bankes to GO.TO.HELL. Simple go to work, forget the bailouts, and go to work. Let the Sovereign debt fail. Let the Big Banks fail, let's start over. Get a new currency backed economy. Stop trading with manipulated markets, produce energy at home. Back economies with hard assets and work or die. Why is it so hard to understand? Because B obama wants us to think everything in life is FREE. It is not. Until 1971. All free.... Abortions Free. Catholics..wake up. NOTHING IS FREE. Unless you are the Federal govt employees who think someone is stealing something from you. YOU PRODUCE NOTHING> NOTHING. YOU PRODUCE NOTHING. haaha God help us.

    ReplyDelete
  9. Ah the miners! Are they worth the risk? Not a chance! All the bag holders from before the 2008 crises are wanting out. look at Agnico today.

    This precious metal community is constantly talking themselves up - and its getting more and more difficult to do.

    What they don't realize is - being so disparaging to everyone else is that they need everyone else for the bull to continue.

    It's best to do what Buffet says. He has been correct a few times.

    Chuck the miners because.....
    -Oil is up
    -Management risks
    -To many companies with only one handful of supposed good groups
    -everyone panning for gold
    -governments are after them
    -you need to people you disparage
    -people like Embry talking about religious experiences
    -no uncoupling of miners - never will happen again
    -it's a trade NOT AN INVESTMENT
    -group think has set in a long time ago

    ReplyDelete
    Replies
    1. http://jessescrossroadscafe.blogspot.com/2012/02/ritholz-has-main-theme-right-but-gets.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+JessesCafeAmericain+%28Jesse%27s+Caf%C3%A9+Am%C3%A9ricain%29

      Either Corzine goes to jail for stealing and Jamie Dimon is fired and Freeh does his job or everyone loses confidence in all these markets period. Either the system corrects itself or it does not. Mr. Freeh better take the side of human beings, not big government and bankers Period. Or, I am not paying taxes Period. Got it. The system has to be policed by people other than Big Gov on the side of Big Banks Period. DO NOT USE THE MEDIA TO FURTHER FRAUD. PERIOD MR. T. WE KNOW WHOSE SIDE MR. OBAMA IS ON. WE KNOW WHAT MR. BERNANKE IS DOING. WE KNOW THEY ALL KNOW SOME OF US KNOW. Now what are they going to do will the rest of everyones money in ALL OF THE MARKETS? Prosecute Corzine, Diamon? Or let the media continue to lie and cheat people?

      Delete
    2. Maybe you should try decaf?

      Delete
  10. always the best read of the morning here.

    if greece can make it til november, obozo wins and goes down as worst president in history in the ensueing socialist debacle.

    if greece does not make it to november, obozo goes down as worst president in history in the ensueing socialist debacle.

    ReplyDelete
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