Once again gold is rising with stocks falling, strongly indicating that gold is riding on the crest of the risk trade, and an underlying slow but steady short squeeze on the physical offtake, most likely driven by foreign central banks and large investors. The paper trade is another thing altogether.
Gold is attempting to break out, but needs to clear 1250 and 'stick it.'
It would not surprise me to see a breakaway gap to the upside on some overnight or weekend.
Someone asked me why I have so much interest in gold at this time.
Simply put, it is because I think gold is on the verge of an historic move, and a shift in the geopolitical money structure that will be talked about for many years to come. But I could be wrong. It could just be another leg up in the bull market.
Silver is poised to break out of a very large inverse H&S formation perhaps. I think we will learn quite a bit of market insight, depending on which metal leads the way, silver or gold.
Then again, of course, the breakouts may not come. But I think they will.
The silver formation is so big and so powerful looking that the breakout, when it eventually comes, might well look like a shaped charge sending out a jet of hot plasma vaporizing a hole through stop losses and short positions.
"Now I am become death, Destroyer of Shorts, pinned on the wrong side of my trade. Lord of the cruel forces of nature."
JPM will get bailed out by the CFTC / Fed most likely, but they will be burning specs and tossing hedge funds onto the bonfire of the vanities.
Watch for a surprise trading house that slithers out of the dark pools to vampirically feed on the trapped shorts when the time comes. They won't be able to use stretchers to haul them out of the pits; they will have to use dust pans.
The actual timing of the event will be tough to forecast precisely. But we are getting closer.
What I find particularly fascinating about this chart is that it is such a good visual representation of the tension between the capping of price by paper shorting, the big line of resistance, and the steady rise in price driven by physical offtake, and the shrinking pool of physical supply against a growing demand for 'the real thing.' The shorts like JPM and HSBC can only push the price down so far using their paper tricks, but the metal keeps coming back.
