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Another day in which stocks came in weak, and ended the day strong after the European markets closed.
VIX remains elevated but the volumes are thin.
Later: Italy credit rating cut to A from A+ by S&P; outlook negative
Futures drop ten points on the news.
It has been a while since we've seen the net to premiums of CEF, GTU, and PHYS this closely bunched.
As always PSLV is off by itself in the stratosphere. But if the premium is generally high then it really does not matter overmuch, does it?
The Gold Daily and Silver Weekly charts are growing rather large since the key breakouts that mark this leg of their bull markets. It does give the big picture, but it could make things a little more difficult to see for the short term movements. Here is a closer look at daily gold.
Although there are a number of possibilities, some of which have been promoted by other 'name' chartists which people have sent to me, it seems most likely that gold is in a short term consolidation pattern, as a pronounced symmetrical triangle. A breakout to the upside seems most likely. That breakout will target 2100.
Notice that gold seems to find resistance and support roughly every $100 higher, at the 80's. So we might expect some hesitation and resistance at the 2080 level should the break out occur.
Barring a major intervention by the central banks, or a liquidation selloff, I fully expect gold to continue to move higher. Rumour has it that China has responded with its terms to remain neutral during such an intervention, and they were draconian indeed. And there is no controlling the mass buying by the peoples of Asia which is still just awakening. Actual buying repression, as opposed to simple price manipulation, is most likely in continental Europe if bank runs occur.
Other forms of general political repression which are already underway in the Mideast, are most likely to make their appearances in at least a few Western countries seeking their Orwellian fulfillment. This depends on some variables which are understandably difficult to forecast. Who will be the first Nato member to declare martial law? .
This is not over, not by a long shot. There is no resolution to the global currency and financing situation which is in a multi-decade change from one system to another. So I would say that we are roughly half way there. My long term target for gold has been in the $4000 to $5000 area, although a spike panic could take us as high as $6700. If it reaches that point I will be a seller of at least a portion of my long term holdings.
My longer term target for silver is in the $250 area, although its volatility could take it above $400 in a buying panic or exchange signal failure. I would consider selling long term silver holdings at the $400 level.
All these levels are obviously reviewed as more data becomes available. What else would an intelligent person do?
Watching the intermediate trend on the second chart, the dip towards 1700 was most likely a significant buying opportunity. I hope so as I took it, and in some size, although I have added and subtracted to that position as the trading fluctuations have suggested in this short term pattern.
I own no stocks, and have a slight short position on the SP.
As a reminder, there is a two day FOMC meeting this week, with their announcement on the 21st. There is also a Comex option expiration next week on the 27th.
Keeping safe is never easy when power is in the hands of the self-interested.
"Double, double, toil and trouble;
Fire burn and cauldron bubble.
Cool it with a baboon's blood,
Then the charm is firm and good.
O well done! I commend your pains;
And every one shall share in the gains;
And now about the cauldron sing,
Live elves and fairies in a ring,
Enchanting all that you put in.
By the pricking of my thumbs,
Something wicked this way comes."
Wm. Shakespeare, Macbeth, Act 4, Sc. 1
"...The entire global system is at a critical juncture with sovereign bonds, currencies, stock markets and the fate of politicians all in play. The hidden purpose of QE and QE2 was always to cheapen the dollar by causing inflation in China and forcing its hand. Critics have said that QE did nothing to help with unemployment and consumption. But that was never the main purpose – the purpose was to weaken the dollar to help exports and get jobs that way, but it takes time.
I removed QE3 from my set of expectations late in 2010 when it became clear that Fed rollovers were enough to keep the yield curve tame and, more importantly, China was finally starting to move on the currency.
For now, QE3 is still off the table. But if the eurozone weakens and China weakens, that is the signal for more QE. It’s hard to know how this will play out, but at least we know what to look for. If you want to see QE3 ahead of the market, watch the euro.
Finally, it is not quite true there are no winners in a currency war. There is always one winner – gold."
Secrets of QE, Gold, and Currency Wars - Jim Rickards
