"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


Wednesday, January 25, 2012

Gold Chart - Updated

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.


  1. Thank you sir! I have been following your commentary for awhile now and really appreciate it. Your most excellent on King World News as well.


  2. Trader Dan wrote:

    "The sheer size and scope of this fund buying has driven out everything in front of it except for the strongest of shorts."

    yes! Dennis Gartman (sp?) was last seen looking for them, he was certain they were somewhere close, if only he could find them

  3. Danno, what a day. I had lost hope on the Miners, but left a few shekels there. Wow, thinking that the run may last a week, but, not chasing yet. I am sure the begginnings of the margin increases start soon. Wow, I love it. I am sure the Miners are a bit relieved especially take over targets. If they put off a stock buyout after today, I am sure they can go back with Cigars in their mouths and start to talk real money, eh? Thanks for all you do. Wish I would have talked myself into a little risk yesterday.

  4. Update to GLD Gold 144 Cycle Chart Hits Tomorrow!




  5. it was risk on/inflation on since jan 2......that just accelerated.

    EU is the only thing to derail it, and depending on how it plays out, gold has a coin flip chance or better of coming out on the safe haven side.

    thanks again dan!


  7. Great commentary as usual Dan. I was hoping to see some comments about silver's big move today in addition to gold. Thanks for all you do.

  8. Dan,

    All I can say as I piled into some cheap SLW calls this morning is thank god, and in a way, I sort of knew this would happen eventually. I was not smart enough to know when but January to February has been kind to the HUI in most of the 11 year run we have had....

    The mining shares were insanely undervalued....made no sense...I thought to myself as I had been adding to my core positions in bigger and bigger lots since September...this will pay off at some point....hopefully the beginning of fair valuation has just begun!

    Thanks for you awesome stuff....I have been a dedicated reader of your materials since 2006 starting on Jim's site, and continue to read your blog every day! Keep up the great work! You have taught me a lot!!!!



  9. Global reflate-o-rama.

    China reflating for 2012 "elections" - Check
    Japan reflating constantly - Check
    U.S. covert relfating via cheap swap lines - Check
    U.S. overt reflating via QE3 in March - Check
    EU - reflating balance sheet by ANOTHER $1T - Check
    U.K - reflating constantly in 75B pound increments - Check
    Pig Dollar - falling hard - check
    Dr. C. - Copper up - check
    Election cycle in U.S. , EU, China and virtually around the globe in 2012, check

    Gold smack dab in the middle of it's 20% leg up before consolidation at 1850. Check

  10. Oh - and I forgot to mention. It's very entertaining to watch the short run for cover like a bunch of cockroaches after the lights were turned on. WE GOT THOSE F'ING COCKROACHES ON THE RUN. ALL SIGNALS GREEN FOR LIFTOFF. PUSH IT UP!! UP!!!


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