"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


Saturday, June 9, 2012

Gold Chart and Comments

I have provided an 8 hour gold chart today as it provides a very good glimpse into the technical composition of that market's recent price action.

Note that you can clearly see the solid zone of buying support extending from just slightly above the $1550 level on down towards $1520. It has been at these levels that strong buying has continued to emerge over the last month. I suspect that it is in this zone that Asian Central Banks are gobbling up the metal. Remember, they will not chase the metal higher - only the hedge fund managers buy high and hope to buy even higher before selling. By keeping an eye on this chart we can therefore get a sense of at just what level these buyers believe gold has "value". It is this sort of buying that provides a base for a market upon which it will eventually launch a rally.

For gold, that spark is not there just yet as the absence of an "immediate or forthcoming" QE event means that we lack the ingredient to make the dough rise. However, the continued ultra low interest rate environment, in many instances resulting in negative REAL rates of return, is strongly friendly towards gold as there is little opportunity cost in holding the metal with yields this low. Also, this feeds into the concerns of those who fear continued currency turmoil.

You can also see on this chart that band of congestion or range trade that was bounded by $1700 on the top and checked by $1620 or so on the bottom. Gold had been in that range beginning back in late February/early March with the top of the range retreating down towards $1680 as Europe worsened.

If you notice, this recent rally off the lows near and under $1550 ran right back into this former congestion range before encountering selling pressure from the bullion banks forcing a retreat.

It will take news of a QE launch to take gold up through the top of that former congestion zone and send this market into a strong uptrend.

We are Back - The King World News Markets and Metals Wrap

Trader Dan has been taking a bit of a break away from writing as the volatility in the market tends to wear down even the veterans at times and requires a great deal of undistracted attention to survive.

I am back for the regular weekly radio interview with Eric King at King World News. Join, Eric, Bill (who always provides a terrific insight into what is going on in the world of real gold and real silver transactions) and myself on the Markets and Metals Wrap.

I hope to be able to provide some charting and analyis this coming week. To those who wrote, expressing concern, thanks for that. All is well - just busy, busy, busy, bzzzzzzzzzzzzz.

Oh and by the way, it is SWARMING season for the honeybees up in this neck of the woods. Chasing those down requires time away from the computer screen, which is a welcome relief to be honest! After all, life does exist outside of the markets and accompanying madness!