Tuesday, November 16, 2010

Was It Really Just A Week Ago?

Last Tuesday at this time, gold was trading at 1424. Now it is testing its first level of significant support at 1340. Almost a 6% correction in a week. Ouch! And at a time when many were "all in" based upon QE2 and this week's POMO schedule. So what happened?

1) The increasingly desperate EE pulled out one of their remaining arrows in the form of increased margin requirements. Not significant monetarily but significant symbolically in freaking out inexperienced, weak-handed longs who were caught by surprise. "What? They can changes the rules mid-game?" Yes, they can. And they'll do it again and again in their pathetic, criminal attempts to retain power.

2) Does anyone else find it just a little to coincidental that, after six months of peace and quiet, the entire EU debt fiasco once again rears its ugly head just as the Euro reached 1.42 and the dollar was collapsing? I mean, seriously, the timing is blatantly obvious. If you don't believe in the global manipulation of the 24-hour news cycle, you should. This is prime example #1. The currencies, in their relative movements, were getting out of whack. Hmmm, how to weaken the Euro and thus strengthen the $? I know, lets bid up PIIG cds and get that ball rolling again. In one week, the euro has moved from 1.3950 to 1.3550 and the USDX has gone from 76.90 to 79. So far, you have to say, its worked pretty well don't you think?

3) Ass-covering academics and politicians, has-been and current, are filing out of the woodwork to cry foul at QE2 but we all know that HellyBenny has no options. If he changes his mind or reins in some QE, the bond market will collapse, taking with it stocks and the entire economy. Rates skyrocket and tax revenues plummet. The entire US ponzi collapses nearly overnight. THIS WILL NOT BE ALLOWED TO HAPPEN. Ignore this nonsense for what is is...media spin and perception management.

4) Please re-read this:


and this:


None of the fundamentals have changed. All that is changed is sentiment and sentiment changes very quickly. The last week being your most recent example.

Keep the faith. Gold and silver are simply testing the support levels I outlined last week. The 1330-40 range in gold should be significant support. Last is 1337. Silver will be very well bid around 25. Last is 25.19.

Obviously, anything can happen going forward but my guess is that, by next Tuesday, all will once again be well, the PIIG situation will have cooled down, the $ will be rolling over and the PMs will have consolidated in price and will be ready for the next big move up, beginning after Thanksgiving.


  1. I'm pleased as punch with lower prices. Hope they stay there long enough for me to get more money into PM. Though it seems like they are dancing with the devil about deliver. A lot of big boys must be smiling and willing to put bids in and collect physical.

    Here is a question. Do you think the EE is willing to collapse or try to collapse the EU/Euro to kick the can further down the road? And if so are they capable of such a feat?

  2. Bought 24 coins today.

    Just doin' my part to bring down JPM!

  3. My finger is hovering over the order button for some physical Au. I haven't bought any since 1300, but I'm very tempted.

  4. Interesting....

    Seems to me playing games with Irish CDS rates could set off a panic. But what do I know?

  5. I agree completely with your commentary T. If they want to strengthen the dollar, they will do so at the peril of the equity markets. Cut your nose off to spite your face. They are juggling too many things right now.

  6. Dec10 gold low of 1329. Dec10 silver 24.98.
    Stopped right on cue.
    Now, of course anything can happen from here but don't be surprised if that's it and the metals recover the rest of the week to close Friday at near unchanged.
    A rally off of these lows will squeeze some of the newly-created shorts, too. It's 72 hours away but lets look for a Friday close of 1370 or so in gold and 26.50 or so in silver.

  7. I should add...WHEN those lows are re-tested, and IF they hold, then we should feel confident about a Friday close back up near 1370 and 26.50.

  8. Meanwhile, (& such as it might be of interest), with the spot price around 16 GBP, the Royal Mint in the UK (which is effectively the price ceiling in the UK) have today raised the price of their standard one ounce bullion silver Britannia, from 25 GBP to 30 GBP.

    Only a month or so back, they had raised it from 22.50 GBP to 25.

    This is a hell of a mark up over spot; deterring purchases seems to be their general aim. In spite of that, they are awaiting stock about half the time.

    I don't know the mintage, noting that we can buy Maples and Eagles here for about 20 GBP; but those are local market peculiarities. All silver coins here are subject to sales tax of 17.5%, which explains the higher premiums in general, but not the extra premium for the UK coin.

    Anyway, they seem to be keen to continue to fend off demand, and as is so typical, the coin price is back again to being almost double the spot price. Lovely coin though.


  9. I'm in, Turd. Bought Silver Eagles today! Choking the Ponzi one ounce at a time.

  10. i bought back when it was $1100 and this last trend coupled with whats happening in Europe right now has me feeling jittery about wanting to sell...

    couple with synthetic gains in the dollar here in the US with endless QE and China with its own house of cards..

    i saw on zero hedge their latest article talking about gold hitting 928 and hoping it holds there when just a week previous talking about "how the best is yet to come" for gold..

    is anyone else confused!?

  11. Brandon,

    at some point, the price of paper gold and physical gold will diverge, as they head towards their diametrically extreme inherent values.

    Holders of physical need to expect in advance, after great volatility where the price can swing either way by hundreds of dollars, for the price of gold seemingly to collapse. It will be a false signal; the price of PAPER gold will plummet as investors rush for the exit, causing those bogus / paper gold and silver markets to rightfully implode.

    After a period of confusion absent of a functioning price discovery mechanism, we will patiently await physical gold & silver's new price; the expectation is that it will be a moon-shot.

    In the meantime, enjoy & take advantage of the ninety something percent discount on physical metal, courtesy of JPM.

  12. i understand what your saying and thanks for replying to my post and im sure you can understand all my apprehension in the matter.

    every source of news and media seem to have different credited "experts" in the matter and each take a different perspective depending upon how they want to spin the information to their viewers.

    i got into gold cause i don't see this trend in QE ending with the exception of when the system itself dies, its seemingly like economic heroin for the system.

    but i wonder what the end game is gonna be like... and i don't have happy thoughts...

  13. My perspective is that while the powers that be can control the price action daily, we can save on things like toner cartridges. I use the proceeds from my savings on
    q2612a cartridges to buy silver.