"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, December 13, 2011

Gold drops through $1660

Gold is coming under increasing selling pressure as technical chart support levels are giving way. As these levels are broken, technically oriented computer selling is occuring. That, coupled with an exodus of traders to the sidelines ahead of the Christmas holiday, is leading to exaggerated moves as liquidity issues are now impacting trading. That is only going to get worse from here through the end of the year. The one plus is that this same dearth of liquidity can result in sizeable pops higher if some large bids hit the market on any news flashes that might impact trading.

Gold took out the bottom of the tightening triangle pattern yesterday but did manage to close above the critical horizontal support level near $1660. Early in today's session, it briefly violated that level but then moved back above it giving some hope to the bulls that it might be able to stabilize. That proved to be fleeting after the Fed statement hit the markets and off came the risk trades.

Down went the equity markets and up went the Dollar, in a very big way, as it is now trading solidly above an important technical resistance level just above 80 on the USDX chart. The Euro is sinking into oblivion with traders tossing it away and rushing into the Dollar, which they are for now viewing as having a better set of fundamentals than Europe, particularly since the Fed statement did not forecast the end of the world as we know it.

The Euro is now flirting with an important chart support level near 1.3000. Failure to hold there will send it quickly towards 1.2860 with a drop to 1.2680 not out of the question.

Back to the US Dollar - The Dollar has not managed a WEEKLY CLOSE ABOVE the 80 level in more than a year. If it ends this week above 80 and particularly above the blue resistance line shown on the chart, it is going to draw in technically oriented buying and has a good shot at a test of the 50% retracement level coming in at 81. A push through this and the Dollar is going to move to 83.


  1. Inverse H&S has broken to the upside on the dollar.

    LS Oct '10, Head April/May '11 and RS Oct '11.

  2. Oh I forgot to add that the H&S time wise is beautifully balanced @ 6 and 12 months respectively from head to RS.

  3. quoting Jim Rickards in Twitter:
    "Remember this: As EUR/USD gets closer to 1.29, #FED gets closer to #QE3 or NGDP targeting. Fed needs weak dollar. Welcome to #CurrencyWars

  4. have you got a buy price target for Au or Ag for us Dan?

  5. it's the best time for our manipulators to keep suppressing gold's price : christmas is coming, operators will be few and far between, so a raid will be more effective...
    Besides US must soon launch a QE3 : who else is buying US debt nowadays, if not the Fed? So the question is when?
    And the answer is probably : let's first wait for investors who flee from the Euro now buy some dollars. Let's not scare them with an early QE3. Let them buy dollars first, then we'll shoot with QE3...
    So I think that, despite all the bull addicts one can hear on KWN, gold is still in its correction phase and can still correct a bit more.

  6. I believe Henri is correct. They need to sell more T's, and quash gold as much as possible prior to the unleashing of overt QE III. Also of importance of the makeup of the Fed Reserves voting members in 2012 is also telling. What would the retirement of Ben Bernanke do to the board? Second in command Janet Yellen, University of Calif Berkley, devout progressive, and flies like a Dove? Major dollar devaluation on its way.

  7. I have 5,000 kilos in a Swiss Bank offering let me know if interested is Legit!
    email: mackbriceno@gmail.com

  8. Pretty amazing. PM's sre now the 'QE' only trade... no QE, they get destroyed. Never mind the miners stellar qtr just passed. Doesn't matter.

    This looks like the beginning of the 08 mess... PM's and shares lead the way lower.

  9. Ahhhh, the good old days (of just 3 years ago) of $6,000 monster boxes.

  10. Started buying miners again Unwired. Just a steady buy of small blocks. If 09 occurs again, and it certainly appears that way...buying on the way down,,and waiting for the burst when QE to infinity starts again...!! Hopefully the last wicked drop can be timed. If not I dont think that the miners profits hurt that bad at gold prices avg $1500 (unless oil skyrockets). Just my opinion.

  11. Gainsville & Tulving silver sale 10 oz NTR milled bars just +49¢
    That's about $290 even. sweet.
    Average on the ride down ladies & gentlemen.


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