We were quite bullish on gold as a new trading week began yesterday, but is there perhaps more to it than merely bullish charts would have us infer? Here’s the message that went out the night before to Rick’s Picks subscribers who may have been disappointed by gold’s quiet finish last week: “Anyone who thinks gold is about to stall out without taking on $1000 should read today’s tout for Comex April. Although the futures have hesitated within 1.70 of our longstanding target [a hula number!] at 952.30, the shallow pullback so far suggests the pivot will not prove to be a serious impediment.” When the dust had settled yesterday, 952.30 proved to have been no serious obstacle at all. In fact, April Gold shot up $28 to $971, and the futures were giving up almost none of the gain as the evening session got under way.
The charts now say that 995.00 should be easily achievable over the very near-term, but we wonder if we’re not being too conservative, considering how spooked the currency markets have been acting. No one who trades gold could have missed the fact that bullion’s sharp rise yesterday came with the Dollar Index also in a steep ascent. This should be disquieting to market observers, but also to gold bugs. While the latter may have reaped substantial trading gains on the move, it suggests that all is not right with the world, to put it mildly.
Someone Wants Dollars!
One observer at Market-Ticker.com noted that there was fierce selling of currencies Monday night originating in Asia. Here’s the post: “Someone, apparently someone in Asia, wants dollars. A LOT of dollars. There is a forced-liquidation event underway that is massive, it is against all asset classes and it is spreading. All of the primary currency crosses got hit at once – euro, pound, yen – all weakened dramatically against the dollar and it is still going on. The Asian stock markets got walloped at the same time in coordinated waves of forced selling. At the same time the US futures markets got nailed as well, down some six handles on the [E-Mini S&P futures] in a near-vertical drop. While this sounds ‘not that big,’ to move these markets in a coordinated fashion like this is a trillion-dollar enterprise. This is not some small company that went bankrupt, or even a large company.”
Although the selling failed to gain momentum as the writer had feared, we would be foolish to ignore the possibility that this flurry of activity is warning of a global run on currencies. The fact that Western Europe’s loans to developing countries, most particularly to Eastern Europe and Latin America, are on the brink of a massive default suggests that even minor disruptions in forex markets should be taken seriously. If, in the next week or so, gold pushes above $1000 with the dollar in a strong rally, we would infer not merely a warning, but the onset of a full-blown global financial crisis.
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The financial pros are panicking again and seeking refuge in the dollar. As the spiral continues and other shoes continue to drop gold goes much higher. Mad Money Cramer went long gold, and their is so much commentary on the subject metal that a contrarian might call it toppy. Not in this environment. Just more fuel for the fire. Targets in the 1350-1400 range by May. And yes, gold bugs and hoarders, when the price of this wasting and useless asset starts to go ballistic, it is not intrinsic value, and it is more than disquieting. It reflects major dislocations in the world.
On a more optimistic note, and keeping in mind that I still refuse to speak with former acquaintances who voted for Obama, he did a credible job addressing the housing issue today. He enunciated many of the causes, offered some palliatives, discussed the pros and cons, risks rewards etc and notably demonstrated an awareness of the conflict in philosphical values surrounding an intervention in the housing deflation. Maybe the administration has the capacity to face reality and learn on the go. It is still all talk, and he has a ways to go before he can convince the capitalists that they are going to die rich old men. However, I feel compelled to remove Obama from my naked short list, pending further review.
Friends, observe last March 14 and 17 people very ebullient re silver and gold at 20.73 and 1004.40 and that was a time to subtract.
Last October 22 and 28 people very bearish on gold and silver at 660 and 8.45 and that was a time to add.
Maybe the financial world will end tomorrow, but Geithner, Obama, Pelosi and Reid have a lot more liars dice to play before the banker fiat currency power in DC ruse self-destructs….
Regards All*Rich
according to sinclare its poland, the zloty, and deritives big trouble brewing
c’mon! sing along!!
you know the words:
Please don’t miss this train at the station
‘Cause if you miss it, I feel sorry, sorry for you
People all over the world, join hands
Start a love train, love train
O’ Jays
Its my humble opinion that gold is rising on safe haven buying. The dollars rising because thats what the dollar does in deflation. People are trying to hedge against conflicting information. On one hand their ears hear all about Obama letting loose with the liquidity canons but their eyes see employment, retail and industrial numbers that make you want to draw up the covers and tremble in fear. Asset price deflation is getting warmed up again and people are misreading the signals they do a simple equation that goes “hell in a handbasket=gold”, but their hearts only partly into it, I think if gold gets to a grand, investors are gonna get progressively jittery, while the dollar still has room to gain on the Euro and the pound is dead man walking.
The dollars is the real move. People are CONSIDERING the hard asset angle as a HEDGE. The very rich are starting to put more percentage into gold due to the uncertaintny angle. The very rich want to still have money even if there’s nothing else left but cockroaches and asparagus left after an economic nuclear war.
Excellent commentary, Rick. It dovetails with Faber, Roubini, Sinclair, Shedlock and even the normally unflappable Yves Smith over at the mighty Naked Capitalism blog – all are detecting a global version of something rotten in Denmark.
Imagine that! The human race entered the age of globalism around the turn of the century and less than a decade later the entire globe is hit by a monster wave of coordinated corruption.
What a surprise!
Could it be gong like this :
– X is buying USD against hard currencies (Sterling, Euro, Yen, …) : USD = appreciating
– X is then going to Comex, buying Gold for these USD dollars : Gold = appreciating, but not too much & very controlled because :
– Y is selling the Gold on Comex (Y is Morgan and HSBC who are the only 2 entities in the world being Net Short Gold : Fed agencies).
=> X and Y are the same entities? (Fed Agencies)
Regards.