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Bear raid today in the metals, as money was chasing stocks after the open, and the metals tanked when New York woke up into the 3 PM London afternoon fix.
FOMC meets this week and announces their decision on Wednesday. This meeting was expanded from one to two days by Mr. Bernanke last month, and is widely expected to facilitate in depth discussions of non-traditional Fed market activities.
The banks love to whack gold and silver prior to a market operation. This way if the metals rally, they have less opportunity to break out and run even higher.
"That day the U.S. announced that the dollar would be devalued by 10 percent. By switching the yen to a floating exchange rate, the Japanese currency appreciated, and a sufficient realignment in exchange rates was realized. Joint intervention in gold sales to prevent a steep rise in the price of gold, however, was not undertaken. That was a mistake."
Paul Volcker, Nikkei Weekly 2004
Let's see what Benny and his Merry Pranksters roll out for the markets on Wednesday.
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.
