Tuesday, November 23, 2010

The New (old) Safe Haven

The events on the Korean peninsula have caused almost everything to drop in price this morning. Everything, that is, except the dollar, gold and silver. Isn't that interesting? Do not minimize the importance of this. The PMs are no longer lumped in as "commodities". They have, instead, retaken their rightful place as a safe haven currency. As I type, silver is up 0.7%, the dollar is up 0.6% but gold is up 1.40%!

The importance of this cannot be understated. Investors worldwide are beginning to see the proverbial "writing in the wall". The US dollar can be used as a safe haven only for very short-term trades. However, the long-term future of the US dollar is bleak, so why even fiddle with it. Just buy gold and be done with it.

We have now reached a very important spot on the daily gold chart. See below:

Trust me on this one, the EE would give anything to buy themselves some additional time by painting a head-and-shoulders top on this chart. The first level that they will defend is 1377 on a closing basis and then, obviously, 1388. Events may spin out of control somewhat and gold may blow through those levels regardless of Blythe's best efforts. However, if she can slow it down, she most certainly will. Your first sign that her efforts are futile will be a close above 1377.60. From there, a close above 1388 is hugely significant as it assures a test of the all-time highs of two weeks ago. By Friday, a close that is simply above 1372 would be fantastic for its weekly implications.

As noted above, silver is not rallying to the same extent as gold this morning. Let not your heart be troubled. This is only temporary. The Monkey Brigade is working feverishly to contain silver below 28.20 and there are lots of paper silver sell orders waiting to be initiated between 28 and 28.20. Give it some time. As frequently noted here, the fundos in silver are overwhelmingly positive. (If you haven't checked Harvey yet today, now is a good time to do it.) Silver will, eventually, blast through 28.20 and rocket back to 29.34. Blythe's attempts to paint the tape there with a double-top will not be successful as silver then streaks to 31, then 33 and maybe even 35.

Don't forget to keep an eye on the Dec10 USDX, too. A move through 79.60 would mean more upside to come. Maybe even an extension up to 81. See the entry "A Quick Buck" from yesterday. A move to that level would definitely be hurt the commodity complex and equities.

Keep the faith. This week is shaping up to be far more interesting than we thought it would be.


  1. Hey, thanks as always! Turd, at what time exactly do options expire today? I tried to find it, but google only gives me dates.
    Shouldn't we expect less resistance afterwards?

  2. The Comex closes at 1:30 EST. Options will continue to trade on the Globex (electronically) through 4:15. A small bit of resistance will relent then. However, if one desires to take delivery on a December futures contract, you must pluck your money by 4:15 this Friday. So, Blythe will most likely continue to sit her rear end squarely upon the market until then in an attempt to dissuade as many folks as possible from exercising.

  3. The fights in the pit are getting very bloody.

  4. I would, just out of interest, love to see some live pictures of the gold trading pit. Its not really possible to get those is it? I know you can subscribe to audio streams but thats all Ive found so far... If anyone knows something please let me know!

  5. Frank: It sure would beat watching the joke that is CNBC!

  6. Another joke is the H&S top. I can't tell you how many times on how many charts that has failed recently. Any suggestion to sell the H&S is mistaken.

  7. The buy side is as aware of the head and shoulder print as the sell side...should be interesting to see how this plays out, but I completely agree with Turd and the fact that the charts (technicals) are not much of a reference point at this time since this is now nothing more than a supply and demand driven market. Everything else is just window dressing.

  8. How long before people get sick of losing money on currency swaps and abandon them wholesale for PMs? I find it absurd that the rats leaving the sinking ships of other fiat currencies are piling into the worst of them all -- The U.S. Dollar. Lots of people need to learn a hard lesson about real money.

    This day isn't nearly as interesting as I was hoping it might be.

  9. Heh...
    Thought everyone might be interested in the gold post (and the dollar post that precedes it). It is what all of the chartists are looking at and fits in well with what your story TF.

  10. sorry i am not a avid follower of this site or zh...but what is "EE?" Is it the "evil empire"

  11. Just a reminder ... Dec 7:

    Turd - eventually you can post a seperate post/blogentry.
    I will also pull my funds (earlier already) and at the same time convert part of it into gold/silver.
    And: I will pull my funds "earlier" - as I expect tricks of the banks or governments eventually. And I won't be long banks and indices (and possibly anything else - for a while) after dec 7 or dec 9th.

  12. Agold: Lets try to keep this is front of everyone, especially as we get closer to 12/7.