"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, January 31, 2012

What is Euro Gold telling us?

Gold priced in terms of the Euro continues to be most impressive on the chart as it creeps ever closer to its all time high. This move upwards is a visual telegraph that there remains deep-seated concerns over the European sovereign debt situation, especially on the Continent itself, in spite of the recent euphoria over "free money" for the next two years.

While the Fed has given the markets, and in particular, the wild-eyed hedge fund community, the green light to buy "risk assets", there is an underlying current of palpable worry which remains in our global markets. Short-term oriented players are betting that they are faster than the next guy and can exit any risk trades if something goes wrong. Longer term players are more cautious but also do not want to be sitting on the sidelines missing potential profits. Expect some wild swings in price even on an intraday basis as we move forward. "Conviction" is not something that we will see much of.


  1. Absolutely right, Dan. Actually, I don't think it will be too long until Euro Gold makes a new high - it's only 3.5% off from its all-time high and the momentum behind gold looks sure to carry it through sooner rather than later.

    Other currencies also stand poised to make all-time highs. In fact the Serbian Dinar just did exactly that. A sure sign that investors in many countries still value gold as a means of protecting their wealth.

    I wrote an article about exactly this, here, if you're interested.


    1. Dan,

      I'm sure that you have heard Jim Sinclair's latest interview with Ellis Martin about the impending undeclared default of 5 major US banks by the International Swaps and Derivatives Association that will be announced this week. If this is true, what will the effects be on Gold once the announcement is made in your opinion?

      Thanks a lot!

  2. For awhile on Friday I thought gold might break out in dollar terms first - we were closing in on 1750 quite nicely.
    Gold has now closed above 1315/oz in Euros, your priceline. We will see tomorrow if the French service which I follow quote their daily price above 42,270 Euros/kilo, the Dec 1st price which equates to 1750/oz US. Personally I don't think it matters the slightest against which currency gold breaks out against first.
    We are in the same shell game as before: its Europe stupid, no its the US banks and their derivative positions, or maybe something else we forgot to watch like the CME losing the last of its deliverable gold, or the economy and its shadowy figures, Iran, QE[n]. Say what you want about Europe - maybe they should go back to the "serpent monetaire" - but think about it - every month the US runs a deficit of over 200 billion. And how much Greek debt do they want to write down?


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