02 December 2011

Gold Daily and Silver Weekly Charts

Gold and silver popped with stocks today, but gave up most of their gains into the close.

I think this is a period when they pause, and will tend to follow stocks at least for the short term as the markets move up and down with rumours and headlines.

The fundamental trend is still very much intact. And the recent Fed activity in providing more dollars to Europe will at some point trigger a rally in gold, and silver, as priced in US Dollars. I have not recently calculated the lag in this. It does vary with the markets and seasons, the meddling of the banks in the precious metals markets being what it is.

I am informed that Greg Weldon sees gold's breakout level around 1804.  You may read about that here.  It makes some sense since that is roughly the high from the last big gold rally prior to the option expiration smackdown.  Personally I see a breakout test around 1830 depending on what point we hit that angular trend channel top.  But these are just quibbles.  The big prize will be when gold takes out 2000, and then sticks a close above 2100. At that point the public might wake up and smell the burning paper.  But perhaps not even then.  It depends on what takes us there.  It may turn out to be a 'blip' in a greater move higher.

I remain convinced that at some point the gold and silver bulls are going to 'break the bank,' and they will be using brooms and dust pans to carry out the punters on the wrong side of that trade.  But perhaps the exchanges will just close down and settle cash at a dictated price, after confiscating the accounts and the positions of small specs.  Oops, already did that last one.

If you have not yet read it, you may wish to at least glance at today's report on Eurodollars posted earlier.  It helps to demonstrate the expansion of dollars in the world, based largely on artificially mispriced derivatives and financial instruments, setting up the dynamic of the financial crisis and this phase of the currency wars.