Gold Shadow Chart - Cup and Handle Calls Out 2000+

The handle is now forming on our prospective cup and handle formation.

The formation will be confirmed if gold can break up through 1800 and keep rallying after a retracement in the handle of at least 20% and no more than 50%.

If gold falls through the 50% retracement then this is more likely a trading range and gold will fall lower towards the bottom of the channel. I do not think that this will happen unless stocks also fall quite sharply. Hint.

Minimum up side target is 2,050 with a chance for 2,300 on this rally leg.

Drifting Through Stagnant Seas Towards the Gathering Storm

"Roll on, thou deep and dark blue ocean, roll!
Ten thousand fleets sweep over thee in vain;
Man marks the earth with ruin -- his control
Stops with the shore; upon the watery plain
The wrecks are all thy deed, nor doth remain
A shadow of man's ravage, save his own,
When for a moment, like a drop of rain,
He sinks into thy depths with a bubbling groan,
Without a grave, unknell'd, uncoffin'd, and unknown."

George Gordon Lord Byron, The Dark Blue Sea

I have had another discussion about economic and world events with Ilene of MarketShadows.  An excerpt is included below.

The financial engineers have taken us with great confidence into uncharted waters. Not to save us, but rather to try and bluff out their blunders and mad schemes.

It is a story of overreach, deception, and betrayal, which is the oldest story from the earliest times.

Enjoy.

As Far as the Eye Can See: Stagnation
An Interview By Ilene with Jesse at his Cafe

Ilene: Jesse, thank you for doing another interview with me. I’m continually learning from your rational, and brilliant, insights into the markets, and more importantly, the human nature upon which they are built. It’s always a pleasure to explore your thoughts as events unfold.

Previously, when we discussed ‘flations, you believed we were heading into a stagflationary period. Not hyperinflation–you didn’t think prices would spiral up uncontrollably. Has the Fed’s new QE-Infinity program changed your mind?

Jesse: No, not at all,  QE infinity was always within expectations, because of the way in which it has been constructed, in addition to the failure of the fiscal side of the house. The President and the Congress control fiscal policy, and the Fed controls monetary policy.

“Fiscal” is how the government obtains and allocates money. It also involves setting priorities, tax policies, tariffs, etc. Fiscal policy is failing to do its part to reform the system that caused the financial bubble and collapse in the first place, and the Fed is manipulating monetary policy and its regulatory powers largely in the service of the financial sector...

Read the entire interview here at MarketShadows

Gold Daily and Silver Weekly Charts - A Rather Deliberate Bear Raid

There was a very deliberate bear raid on gold this morning as someone or some group dumped a large number of contracts into a thin market. You know the drill: Dr. Evil.

What next? In the short term this is a technical market, meaning that those with the most power and money, the market insiders, get to cast the most votes on price, particularly as the regulators are bought off or sleeping on the job, waiting for their own spin through the revolving door.

In the longer term the primary trend will prevail, and the primary trend is higher as long as real interest rates on the sovereign notes are negative.

SP 500 and NDX Futures Daily Charts - A Bounce

The US markets bounced today in relief that Citi was able to gin up some decent numbers to report, no matter how they did it, including a somewhat mysterious $500 million tax break that goes to profits.

What next? Let's allow the week to play out and we shall see if the trend is changing or if this was just a relief rally in a new downtrend. I cannot tell yet.