Wednesday, August 31, 2011

Gold impulsed upward yesterday and might soon challenge its record high of 1917.90, which is attended by two Hidden Pivots as if by a pair of bodyguards.  Tuesday's high in gold extended the post-plunge retracement by a few dollars, cancelling the active bearish pattern that we noted in yesterday's edition.  The futures reversed three ticks below an important midpoint pivot whose sibling "D" target of 1912.80 is five dollars and a dime below the all-time high price of 1917.90.  Less than four dollars above that record, at 1923.80, is the midpoint of a very large and important pattern which projects all the way to 2142.30.  The anti-gold cartel might be expected to fight hard as gold approaches or just surpasses its current all-time high, not least in order to fend off the milestone of $2000 per ounce.  With two significant pivots so close to the high, the trading up there promises to be very interesting.  (Posted by Doug "harry" McLagan)

Index futures were being coy around dinner time Monday, doing nothing, but Gold on the other hand look to be revving up for a $25 finishing stroke to the day's encouraging beginnings.  Stay tuned for Doug 'Harry' McLagan's bullion touts due out later this evening.

I'd love to be able to say more about the dollar, but the medium-term charts have been constipated for months.  Presumably, there are two supports being defended by the Powers That Be:   early May's lows, just beneath 73; and the Maginot Line at 70. From a Hidden Pivot standpoint, the downside looks no worse than 73.09 on the next bout of weakness (see chart).  Alternatively, the futures would need to thrust above 75.75 to hint that something interesting was going on.  My suggestion is to set an alert at these numbers -- and to wake me if one or the other is hit.

[In the essay below, Rick’s Picks forum regular Robert Moore explains why a resource so very abundant as silicon could have value, but also why, like so many other physical things, most particularly gold, it is continually increasing in value relative to the U.S. dollar. RA] Why all this recent focus on value? There is so much banter and opinion circulating today about “intrinsic value.” Most often, I see the term being applied to competing monetary instruments: Gold versus government-issued paper currency. Everyone insists that their monetary instrument of choice somehow has more intrinsic value than the competition. While I find these arguments entertaining, I can’t help but dwell on the fact that both points of view are completely short-sighted and arbitrary, to wit: 1) Gold has value as an electrical conductor that does not corrode. In fact, a ship wired with Gold would be able to sail the oceans for millions of years. This makes Gold vastly superior to copper, which corrodes and loses its conductivity exceptionally fast in the presence of saltwater. Now, just imagine an entire Internet wired with Gold -- such a knowledge base would be nearly as timeless as the Universe; and 2) paper has intrinsic value in the fact that if we did not produce it, there would be far more trees around, and therefore less atmospheric CO2. So, paper is incredibly valuable to those who wish to preserve the fear factor that humans are destroying our planet via climate change. Okay, the above points are intentionally facetious, but they are meant to drive home the point that value itself is subjective, and that arguing about it might forever label you as a fanatic (especially if the basis of the argument is a certain yellow metallic substance) When people argue “value” in monetary terms,

It was stumble-step-step-stumble yesterday, but because the futures got past a minor Hidden Pivot resistance I'd flagged at 1215.00, they should be presumed on-track for a run-up to 1241.00.  The action was so erratic that there will probably be little value in my suggesting a camouflage strategy for Tuesday night.  In fact, the futures were weakening as we went to press, and a further 10 points of downside from here, exceeding a prior low at 1192.00, would turn the hourly chart bearish.