Gold Sets a New All Time High

Gold spot price briefly spiked over 1250 before pulling back as speculators took profits, and metals bears put on fresh shorts in the hope of an overreach and a double top.

The breakout needs to take out the 1250 area and hold it, put a nail in it. It will likely back and fill before making its move. I have added the new short term fibonacci retracement levels to the chart.

There is something profound going on in the background of this market, making it well worth watching even if you do not have an investment interest in it specifically.



There is nothing wrong with selling strength and buying weakness to round out a trading position. But you never wish to lose your entire position in a bull market, because it becomes a formidable task to buy back in, a real effort of will and emotion to get back on the train once it has left your standing at the station. Rather than admit they were wrong, most amateur investors will instead become bystanders and spectators, jeering and cajoling the passengers to get off as well, so they do not feel so foolish and lonely as the bull market passes them by.

"For instance, I had been bullish from the very start of a bull market, and I had backed my opinion by buying stocks. An advance followed, as I had clearly foreseen. So far, all very well. But what else did I do? Why, I listened to the elder statesmen and curbed my youthful impetuousness. I made up my mind to be wise carefully, conservatively. Everybody knew that the way to do that was to take profits and buy back your stocks on reactions. And that is precisely what I did, or rather what I tried to do; for I often took profits and waited for a reaction that never came. And I saw my stock go kitting up ten points more and I sitting there with my four-point profit safe in my conservative pocket. They say you never go broke taking profits. No, you don’t. But neither do you grow rich taking a four-point profit in a bull market." Jesse Livermore

Net Asset Value of Certain Precious Metal Funds and Trusts

SP June Futures Daily Chart

The SP futures were selling off after the close of cash trade and went out on the low of the day around 1047.50.

That is some big support down at the prior lows, and if it does not stand up to a meaningful test the 990-1000 level beckons.

The performance of gold today, moving sharply highly in terms of dollars while US equities were falling was interesting, but the sharp rally in silver was stunning. This tends to lend some credence to the stories of a developing short squeeze in bullion that we keep hearing about. With the right catalyst we might see something pretty spectacular. But as always, play the probabilities if you want to remain standing in this game. The way to take advantage of the unexpected is by having core positions in a bull market trend and never touching them while the trend remains intact.

The June futures will be rolling over to the September contract soon enough, so we will be changing this chart. The basic shape of the formations will remain the same, but the support and resistance levels will change because the later month carries a different premium to the cash market.

SP futures drop again into the fourth circle of hell.

Gold Attempting To Break Out to New Highs

Gold is attempting to break out and confirm its cup and handle formation. It moved sharply higher on increasing volume right after the PM fix ($1,215) at the LBMA in London. If it can surmount resistance just above it may do a breakaway gap higher some evening and keep going. I will be a little surprised if it can break out quickly and in one move. Backing and filling the breakout is more likely, unless there is some sort of default in progress, or a heightened risk of a failure in the paper markets somewhere. I thought it was interesting that the rally was triggered off the PM fix in London, the 'fractional reserve' bullion market.

Some accuse me of being too conservative in my gold forecasts. Or at least they do when it rallies. Others think I am far too optimistic, but from economic theory most appropriately described as faith-based, but profanely so.

Let the charts speak for themselves. But however it develops, I will say that what we are witnessing is a generational monetary phenomenon, at least for those who have the eyes to see it. This is one of the few things of which I have been certain, and looked for it starting in 1999 when it became obvious that the dollar could not sustain its role as a gold substitute with the stability that is required of the world's reserve currency.

I am getting more anecdotal information of panic buying of physical bullion especially from substantial holders of 'old money' and amongst some of the average investors in Europe and Asia. I do not think that the public by and large has even started to buy bullion in the States. When they do the Comex will be overwhelmed and simply default, and then the situation will intensify as even more financial frauds and semi-official corruption begins to be revealed across many markets and institutions that have been operating in secrecy.

"Every thing secret degenerates, even the administration of justice; nothing is safe that does not show how it can bear discussion and publicity." John Emerich Lord Acton

For the most part Americans, and perhaps it would be fair to say even most of the English speaking peoples, are still moving through life blissfully and largely unaware of the global currency crisis and its implications for them, with a few notable exceptions. The trust they have placed in their politicians and institutions is being badly abused, and they will be shocked if the extent of its breadth and depth, the secret dealings and corruption, are ever exposed.



The details of each chart are unique, as is every breakout. So far the gold action suits the overall framework, but it would be a mistake to look for a perfect duplication, particularly in markets that are tainted with paper manipulation and semi-official fraud.