08 November 2012

Gold Daily and Silver Weekly Charts - Rally Day for the Precious Metals

"You can fool some of the people all of the time, and all of the people some of the time, but you can't fool all of the people all of the time."

Abraham Lincoln

The precious metals had an exceptional rally today,  given that it was in the face of another sharp decline in the equity markets.  This is constructive for the bullish case.

I have closed out the 'short stocks' portion of my stocks-bullion hedged trade today. There may be more downside ahead for equities, but it looks to be a bit overdone, at least in the short term.   I also took some of the bullion positions down as I had taken it to a maximum on that big decline shortly before the US Presidential election.  Now it is at a more comfortable 'running' level.  As always, this is with regard to my 'trading positions' as I do not touch or even look at my long term holdings.  

Gold has moved very nicely through the resistance around 1720 and 'stuck a close' for today over 1730. We *might* see a test of that resistance at 1720, which is now support below the current price. But if this is a handle in a cup-and-handle formation, then that does not matter, and it is playing out very well.  However a clear break above 1800 is key.

The central banks are printing money to rescue the Western banking system. There is an enormous macro event taking place in the global currency as the US dollar reserve currency agreement, in place since World War II, has been changing for at least the past ten or more years, first slowly but soon with increasing speed.

Very few people understand what is happening, even amongst economists. Those who stand against this sort of change will find themselves swimming against a rather powerful secular tide.  There is nothing cyclical about this financial crisis or the economic ills that have accompanied it in the conventional economic sense, unless one wishes to start looking at very long, generational cycles of human wickedness and folly.