"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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Gold shattered overhead resistance near $1680 and has continued higher as momentum based buying is coming in driving out panicked shorts who were hoping for a halt in the advance to occur as the market encountered bullion bank selling originating at $1680. The FOMC made that a mirage as a zero interest rate environment for the next two years means an environment in which it pays to own gold. The yellow metal pays no interest but at this point, neither do short term Treasuries and those offer no protection from currency induced price increases. Just look at what is occuring across the commodity sector today as hedge funds now push the price of food, energy and metals in a northerly direction. Forget about tame inflation - that just vanished.
The sheer size and scope of this fund buying has driven out everything in front of it except for the strongest of shorts.
Gold has light resistance starting at $1705 (it is right on this level now) or so and extending towards $1720-$1725. The latter is the important 50% Fibonacci retracement level from the all time high to the recent double bottom down near $1535. The bears are going to make a stand near this level. If the fund buying remains as robust as it was today - the bears are going to be routed. Pushing through this cap will set it up to make a run at $1750. If the shorts can defend $1720 - $1725 then we should see a retracement back towards the $1700 level initially followed by $1680 where support should emerge.
By the way, the HUI and some of the gold stocks dodged a very big bullet today courtesy of the FOMC. They were in severe danger of breaking down technically.
Or in the words of Captain Jack Sparrow. "Drink up me hearties".
The FOMC just gave the green light to every hedge fund manager between here and the planet Mars to cram every bit of leveraged funds they can borrow or beg into the commodity sector and the equity markets.
Gold soared through overhead resistance at $1680 as if it was non-existent. Silver shattered $32.50 rebounding over $1.50. Crude oil is now back over $100 and gasoline just soared another $.05/gallon. Gasoline prices alone have now rallied 40 cednts a gallon since November. Get ready for more pain at the pump. Here we go again!
The CCI shot up; bonds rallied over 2 full points and the US Dollar just got clocked. RISK ON - who gives a crap about European sovereign debt woes or Greece or anything. Free money - more free money - and even more free money.
"God Bless the Fed" is now being heard around the lunch tables at the restuarants as hedge fund managers raise their glasses of Chablis to toast their new found prosperity.
