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This formation, if activated and valid, would target gold to a much higher level than the previous high.
Let's see how this develops. I will be tracking both this and my normal scenario obviously. Both are bullish but this alternative view promises a wilder ride.
The similarity between the big accumulation-liquidation cycle and the previous cycle from March to July is remarkable in many details.
That does not necessarily mean that the next move will be of the same magnitude. But if that pattern holds we get a target of between $2,800 and $3,000 for the next leg up.
I would wait for this to unfold therefore and strongly advise that you not try to get ahead of it. Any successful trader would gladly give up the first ten percent of the next bull move to wait for confirmation to make sure, as Bernard Baruch used to say among others. The first level of key resistance is $1620.
Once the current decline is over and the positions have been liquidated, market participants will be sitting on their piles of paper in fear and trembling of what comes next. And 'what comes next' is the key variable. Will it be a continuation of this pattern, or a repetition of a series of formations in complete recycle?
That is hard to see now, and what might provoke it. Will it be a major quantitative easing in the dollar and euro, or a further liquidation and collapse in the banks and stock markets?
I would prefer a measured bull market move higher, but we must carefully observe and accommodate the changes in the structure of world currencies and the evolution of what we call 'money.'
This is a major engagement in what we have come to call The Currency Wars.
Hermes: 'Alas?' This word of regret the mighty Zeus does not understand.
Prometheus: Time in its aging course teaches all.
Aeschylus, Prometheus Bound
I liked the silver action a bit today, and added back some protective stock index hedges to cover a dalliance into the beaten down silver and gold miners, while adding to the existing bullion positions as well.
This market is as phony as a politician's promise and a banker's smile. The best sector play for most people is 'out.' The further away from Wall Street your money is the better.
The children come home from school for the holidays today, so no more expansive updates tonite. Too busy preparing the fatted calf and all that.
Tomorrow is the Zynga IPO and the Street wants to feed it out to the market which these days is mostly pros and schmoes (daytraders) who flip shares to each other like an egg-tossing contest.
The MF Global story continues to grow more noisome each day.
Watch the action into the weekend. I remain highly defensive in mostly long term holdings, cash, and hedged trading positions.
Perhaps this is why the western Central Banks are so determined to prevent the price of gold from breaking out, and keep putting out disinformation from within a cloak of secrecy about their inflationary policies and money creation.
Negative real interest rates are very bullish for gold, and highly corrosive to the ordinary savings of those who lack the sophisticated financial instruments to otherwise protect themselves.
...Negative real interest rates occur when the inflationary rate, or CPI, is greater than the current interest rate. A quick account of the G-7 and E-7 countries shows that the majority have negative real interest rates.
Across the developed G-7 countries, British citizens are the worst off with real interest rates in the U.K. sitting at negative 4.5 percent. U.S investors aren’t doing much better with rates at negative 3.25 percent and the Fed has all but guaranteed rates will remain there. Only Japan has a positive real interest rate among the G-7 and that rate is barely above zero.
Conversely, the most populous nations making up the E-7 have mostly positive real interest rates. However, the grouping’s grandest economic powerhouses, China and India, have negative real interest rates sitting around negative 2 percent.
Frank Holmes, Central Bank Appetite And The Monetary Case For $10,000 Gold, Forbes
