"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


Friday, January 13, 2012

Gold retreating from chart resistance near $1650

The inability of the metal to secure a CLOSE above $1,650 in spite of yesterday's surge towards $1,660 has engendered profit taking by shorter-term oriented longs this morning. As noted the other day, the metal has had a strong rally off of a major double bottom on the chart near $1,535 since the last couple of trading days of 2011 to the present coming over $130 higher since then. Longs are wisely pulling some chips off of the table after watching the push higher in yesterday's session fail to attract enough momentum to keep it trading above that $1650 level.

The US Dollar surge to yet another 52 week high is proving to be a source of some rather stiff headwinds for the longs today as the equity markets are selling off and risk aversion trades are showing their usual signature once again.

Dip buying has been the order of the day since this rally began. We will now watch to see where this buying will resurface. There is some light support that should appear near $1625- $1620. If it does not hold there, $1,600 is the next stop.

Bulls will need to push this thing past $1650 again and KEEP IT ABOVE THAT LEVEL to have a legitimate shot at $1675 - $1680, where bullion bank selling can be expected to appear.

The trend on gold since August has been down on this shorter term chart. However, the inability of the bears to take the metal down below $1535 and start another leg lower resulted in a bout of short covering among the weaker hands in that category. Bulls have pressed hard using the strong physical offtake at the lower price levels as their ally and have managed to take the price over $1600 which is constructive. But they have a lot more work to do to turn this chart pattern decidedly bullish.


  1. Now I know why those scumbags had the bots on .. S&P Friday is here - it's all over the media now. Word got leaked yesterday obviously to the bullion banks ... Good time to get short. Ride it down to 1585/28, then back up when things stabilize.

  2. As per the Guardian UK website, Bloomberg is reporting the annoucement will be at 3PM Eastern Time.


    The bullion banks have turned the bots off for the time being. A one notch downgrade of france would probably be neutral, a two notch downgrade would be deadly. Either way, my opinion is that risk reward is setup favorably on the short side heading into 3 PM.

  3. Looks like it's only one notch! S&P really pussied out. No downgrade for Germany, only one notch for France. Cartel will probably put the hammer down at the announcement at 3 PM, like they always do, but should just be a blip on the radar as far as sentiment goes. I suspect the bull trend will remain in tact, unless something else causes it to derail


  4. Dear Willydog, I have always believed that "What is well known isn't worth knowing" - meaning that it's already in the market. Obviously this will get pavlov's dogs frothing, but really is it that important that DXY makes a marginally new high so far. So now France has the same rating as the US.
    I do not think that the markets have priced in a war with Iran - read Rickards on King World News. I would think it difficult to maintain the bond bull market under such a scenario - like you can't have your cake and eat it too. Did Marie Antoinette really say "Let them eat cake", or was it just the Main Stream Media?

  5. Hi Tom. Disagree about being priced in. Obviously, what was "priced in" is what was delivered by the S&P - a very mild report - even by their pathetic standards. If there was a two notch downgrade of France, it would have been risk off.

    Regardless, the bull run continues in precious metals and commodities. All that fresh cash from the LFMAO (LTRO) is going right into the stock market, which is supportive of commodities. Add to that fact that U.K, U.S. China, Japan, European Union are all easing and printing money - and you have the perfect storm for the bulls.


Note: Only a member of this blog may post a comment.