"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


Thursday, September 15, 2011

Everything's Okay - Western Central Banks find Dollars to feed stressed European Banks

Pity some of the poor banks of Europe - it seems that they are having difficulty finding others to loan them Dollars at a "reasonable" rate of interest. If I did not know better, I would say that they are being unfairly discriminated against merely because they have laughably pathetic balance sheets. Oh and did I mention that they have boatloads of Greek bonds hiding in there somewhere as well?

No worries however - the posse is right around the corner, riding to their rescue to save them from the usurious money lenders who would do them wrong. Yep, once again the Central Banks come running to the rescue of the pestilential bankers who continue in their parasitical role of leeches and ticks, sucking the life blood out of the financial system whenever their own greed and stupidity ensnares them in a web from which they are unable to extricate themselves.

"HELP! HELP! We might fail and take you all down with us UNLESS..."

The story never does seem to change does it?

Somehow this is supposedly good news for the global stock markets but then again I basically gave up trying to make sense of the insensible every since the bailouts began when Lehman collapsed back in the summer of 2008.

I think a rewriting of our school books on the causes of lasting prosperity are long overdue since what I learned back when is obviously out of vogue. Nowadays all that is required is liquidity, lots of liquidity. (I am reminded of that scene in the original "The Matrix" move when Neo and Trinity go to rescue Morpheus from the clutches of Agent Smith and need, "Guns, Lots of Guns" to do so). Substitute suitcases of borrowed-into-existence money and you get the general idea as to what is now considered the essential ingredient for true prosperity.

That brings us back to gold once again as it continues under assault from the Central Bankers who seemed deathly terrified of it making its way to the $2,000 mark. Ever since the takedown in the wee hours of the night as chronicled here    http://traderdannorcini.blogspot.com/2011/09/central-banks-waging-war-on-gold-at.html   gold has been on the defensive. That assault intensified near the $1880 level and it is that level which has thus far proven to have been unpenetrable.

Failing there, it subsequently retreated to a chart support level near $1840, which failed to stem its bleeding whereupon it then dropped to test the next support level near $1820. That too failed as did psychological support at round number $1800. It is now flirting with the next support region centered near the $1780 level. Failure there and it should try to test the level near $1755. Beyond this there is not a lot in the way of chart support until it gets down near the $1725 - $1730 region. We will have to see where the big buyers related to the upcoming festival seasons in Asia make their appearance to stem this latest setback in price.

Before gold can hope to get anything going to the upside it will have to recapture $1840.

The HUI is moving down towards stronger support near the rising 40 and 50 day moving averages. Once it failed to move back up and away from its former "gap and go" window near 608 after retesting that breakout level, technical selling has now taken it lower as some discouraged longs liquidate and some fresh short sellers reappear. It will take a push through 615 - 620 to see some of these new short sellers squeezed out.

Meanwhile, it has bounced off the level near 580, a level which some of you might recall had proven to have been incredibly stubborn overhead chart resistance for most of this year. It was not until this level was decidedly broken to the upside that we were able to see any strong move high in the mining shares. Now it is serving as downside chart support, which if it holds, will be very friendly indeed. This level also now closely corresponds to the rising 40 day moving average, a level at which some funds like to buy if they are playing the market from the long side.


  1. Thank you Dan, I was yearning for your post on this current action, and you delivered as always.

    Thank you

  2. Dan, what is your opinion about Banks use gold to get dollar funds. http://www.zerohedge.com/news/global-liquidity-bailout-arrives-ecb-announces-emergency-liquidity-providing-operations-conjunc

    Sounds not very gold friendly

  3. Finally, we are exporting something and people are listening to us...it's the idea "quantitative easing" works. The European central banks have thrown open their teller windows, and the FED's QE philosophy has taken hold across the pond -- now the Euro can slip and slide, and swing wild, and everyone over there can take a bath, just like us.

    Gold is down on the news that more bales of fiat paper are being stuffed into the swamp in a futile attempt to firm it up.

    Can you imagine that? It won't work. It's like Gov. Jindal thinking helicopters could haul enough sand to build barrier islands against the Gulf of Mexico.

    I wouldn't worry about day-to-day, or weekly variations of precious metal prices, if you are under 75 years old, by gold.

  4. Dan, think of last time -1480 support, I think the bleeding will stop somewhere around 1750. Maybe very short testing 1720, I dont think it will go loweer than that. I am in physical market, and today my clients rushed to fix the gold..

  5. I still sit and ponder the last Bear Stears Co. market watch update for the coming quarter. Quickly sending it off to all my small business clients puffing out my chest as to how the market was going through a rough patch. Early September 2008. Three weeks later we were on a conference call, Bear Stearns was no longer able to fund us. Ever since, no economic data makes any sense. Today, umemployment filings went up to 428,000. (UNEMPLOYMENT UP) Market expectations 400,000. CPI (.4%)Market expectation (.2%). (Inflation UP) Empire Manufacturing -8.8% last month -5%.(Manufacturing Down) Stocks up? WTF is going on? What planet do I now reside on? Buying more Gold Mining stocks today. No confidence in any US market. Banks up today. WTF? I guess they now KNOW if we can bail out Europe, we most certainly will bail them out. Pitiful.

  6. Sorry Dan, I get a bit frustrated when the market news of the day is digested. I wanted to thank you for your Blog. It helps to hear the truth. The truth is going to make alot of fools of alot of people soon (someday). The sooner the better, so we can face the worst, then get on with it again. The article on Jesses Cafe on why it will be such a long painful process is probably right. I long for a quicker end. Oh well.

  7. haha, well said Wolf, just the truth....only physical gold and silver matters...and you Dan, what can I say, your are the best on the web, thank you.

  8. Just maybe this time it will be different. When the price of gold and silver are pushed down by cental banksters, instead of instilling fear and a general loathing of buying the opposite will occur. An army of small investors will decend on the physical markets like a plague of locusts from biblical times and devour all things physical.

  9. The way you express your incredulity is funny, Dan.


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