"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


Tuesday, March 1, 2011

Gold - Daily Chart update

Gold went on to make a new all time high today steadily gathering strength as the trading session wore on. The catalyst was soaring crude oil prices which generated both a safe haven and an inflation bid in the metal.

There are two things to note about this:

First - the metal did this in the face of a safe haven bid going into the Dollar. That generally translates into gold rising in terms of most of the other major currencies. For example - gold priced in terms of the Japanese Yen is within striking distance of its all time high. Euro-priced gold is 23 euros shy of its all time price in that currency. That is a good sign from a trading standpoint because it indicates that the market is not moving solely on Dollar related issues but is strong based on its own merits.

Second - While the speculative money has been returning to the gold market since it hit bottom near $1310 back in January, they are still not near their peak exposure based on recent measurements. Translation - although the market has come a long way the long side, while definitely getting busy (which is what we want to see by the way), is still not all that crowded.

With the market trading well above all of the major moving averages, the speculative long crowd is in the driver's seat for the time being. It would take a plunge down below $1400 now to run a large number of them out. The market is in a posture which should engender buying on dips rather than one of selling rallies based on its current technicals.

I would like to see the metal push a bit further past the old all time high and work closer to $1440 to begin accelerating as I believe that would force out some of the larger shorts who are better capitalized but do not have the depth of pockets of the pestilential bullion banks.

We should look for support to surface initially near $1410 and if that failed to attract enough buyers,  then $1400 comes into play. That would need to hold to prevent a bit deeper pullback in price, that might possibly take it down towards $1380.

Upside is now in uncharted territory once again so are making projections where resistance might be expected to surface. There looks to be some resistance near $1445 followed by $1450. If the market pushes through these levels in the next few days, quite frankly there does not appear to be all that much standing between it and a run towards $1500.


  1. Hi Dan,

    Thank You for the site. It is absolutely great. I have one question. Why do you use the pitchfork in your technical analysis? How do you decide which swing high/low to use? I don't see alot of people using the pitchfork in their trading. I find it interesting and am wondering if it has become a lost art?

    If you have time...


  2. Brian - Yes, it is an old tool that I use mainly when we are into uncharted territory in an attempt to decipher possible resistance or support levels. It is probably better on a longer term chart but it can be employed on a shorter term basis. I do not take it as gospel but if it lines up with a signal on a technical indicator, I feel more comfortable going with the signal.

    Use the greatest high followed by the recent swing low to set up the parameters.



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