"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


Monday, December 5, 2011

Gold loses battle for $1750- needs to push through $1765

The failure by Ol' Yeller to extend past $1750 has tripped some of the shorter term technical indicators into a sell mode. As you can from looking at the blue downtrend line, Gold cannot seem to extend past this line. The positive is that it is also holding the uptrending red support line with the result being a tightening pattern or almost a type of coil that is forming.

Gold bulls need to watch this carefully as a failure to hold above $1650 will send the metal very quickly towards the $1600 level where it must find active buying to prevent a deeper setback in price which could potentially take it first towards $1550 and even towards the $1500 level should it fail to hold there.

A push back through $1765 turns the chart pattern friendly with only a closing push through $1800 allowing for the resumption of a strong uptrending pattern and a test of the all time high.

All eyes in gold are on Europe for the time being as its fortunes are tied to developments there. If the European ministers meeting in Brussels this coming Friday come up with a plan that assuages fears of investors/traders in regards to the sovereign debt crisis there, gold should extend to the upside as the market will move towards the risk trades again. If they disappoint, gold is going to be fighting some very strong headwinds as the Dollar will rally and possibly take out strong resistance near the 80 level on the USDX.

Euro Sliding Lower - Surrendering Gains

The morning euphoria tied to news of proposed deficit cuts in ITALY and news that both Germany and France had agreed to push for changes to the EU treaties in regards to tighter budget and deficit rules for member nations has given way as news hits the trading floor that ratings agency Standard and Poors is placing both Germany and France on review for a potential downgrade.

Other AAA rated European nations are also going to be placed on review. Once put on review, any downgrade could occur within 90 days.

Gold and Silver were both hit hard on the newsflash.

CFTC moves on the heels of the MFGlobal debacle

While definitely late, the CFTC is moving to bring some much wanted scrutiny and overdue regulation to the futures industry in regards to segregated customer accounts.

Here is the story from Reuters:

CFTC approves rule on protection of customer funds
WASHINGTON | Mon Dec 5, 2011 11:21am EST
(Reuters) - The U.S. futures regulator approved on Monday a rule that puts tighter limits on how brokerage firms can use customer funds, a measure that the now-bankrupt MF Global had encouraged the agency to delay.
The measure was finalized by the Commodity Futures Trading Commission by a 5-0 vote. The rule was initially proposed by the CFTC in October 2010.