"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


Thursday, April 5, 2012

Weekly Gold Chart

Gold did not have a good week falling below chart support at the 50 week moving average for only the second time since the bottom made way back in late 2008/early 2009. As you can see, since then it had only violated this important chart level once and that was the very last week of trading in 2011. You might recall that funds were then dumping longs, booking profits before year end and moving out of commodities over fears of European sovereign debt meltdowns.

The start of the new year brought with it expectations of increased liquidity coming from Western Central Banks to deal with the fallout from that sovereign debt crisis and the deflationary impact it would necessarily have on global financial markets. As the new year unfolded, funds increased exposure to the commodity sector in general and to gold in particular, that is until Uncle Ben and his merry band of dollar creators decided to try talking down the commodity sector and herding these pesky funds into the equity markets instead.

Seeing the importance of this chart level now violated, it is imperative that bulls push the price back up through it before the end of next week's trade. Two consecutive weekly closes below this level would not augur well moving forward.

As long as gold holds above the red lines shown on the chart and labelled as chart support, it will be okay as it still remains in a very broad range defined by a top at $1800 and a bottom down near $1535 - $1530.

Central Bank buying has been quite strong down at that latter level and I would expect that to continue should price indeed move down towards that level.

As far as any upside momentum goes for the metal, it is going to have to firmly clear and hold the $1680 level before it can generate the least bit of excitement.


  1. Thank you Dan. Blood is in the water. Time to see if the Dow is ready to plummet down.

  2. It's only temporary. The Fed and it's agents have guided the sheeple through the equity barn doors. The sheeple think they have a fresh hay bed to lay on and a corn meal dinner. However, earnings multiples are now higher than the 35 year average, so unless multiple expansion continues, that money has to go somewhere else.

    So where is all that money going to go now? Shorts are trading with no fear. With the gold cartel on their side capping upside action at 2% daily, I can see why. That said, we're starting to get ripe for a short squeeze. Blythe and her trained monkeys shake the tree both ways when they have prices under control.

    Why don't they just let traders go crazy on gold/silver. Does that really hurt anybody? Unlike oil and other commodities that impact consumer bottom lines. They can't get their dirty hands in there though.

  3. Speaking of Blythe, she just defended JPM today on CNBC. Take a look:
    Blythe Masters defends J.P. Morgan (JPM) on SILVER

  4. Isn't it interesting that GOLD never has a large GAP-UP event. When was the last time that happened?


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