The Definitive GOLD’s Near-Term Outlook Thread
You’ve gotta love Ron Paul, thanks roberts!
“Big overseas Treasury holders such China and Japan are believed to have “strong-armed” the US in the recent past behind the scenes and essentially said “You either quit undermining your currency and defrauding us with your zero interest rate policy or we are going to dump them, big time, and collapse the Treasury market.” The Treasury market is the “aorta” of the US, which involves swapping essentially worthless paper for the goods and services of countries that are dumb enough to buy them, thus allowing the US to live way beyond its means running continuous massive deficits.
It is viewed by the administration as infinitely more important than the stockmarket, which is small in comparison. It is thus clear that if it is necessary to sacrifice the stockmarket by raising interest rates to rescue the Treasury market, then that is what’s going to happen. The rising Treasury yield curve, which has recently become very steep is indicating that rate rises are in the pipeline.
Smart Money has already got wind of this and has been stampeding to close out US dollar carry trade positions, hence the breakout and sharp rise in the dollar, and the plunge in gold. The ordinary Joe sat rustling his newspaper hasn’t got the faintest idea of what is going on as usual.”
Another very interesting fact revealed in Ted Butler’s last KWN podcast: This correction was expected to shake out the “weak hands” and enable a liquidation of the commercial shorts. Everyone expected the commercial net short positions to go down on whole. Instead they went UP in the latest COT report.
What this says to me is that the correction in gold driven by dollar strength and some manipulation in the market wasn’t deep enough to shake out the expected “weak hands”. I expect this will mean that the manipulators will make another attempt to shock the market to the downside and trigger a lot of big institutional selling, thus enabling the liquidation of shorts they have been waiting for.
When I showed my girlfriend the gold chart after the Thanksgiving night massacre, her reply was “Holy cow. If this is Thanksgiving, what are they going to pull on Christmas?” We’ll see soon enough whether the big commercial shorts use the cover of the Christmas or New Year’s holidays to affect another downside manipulation…
Interesting info, GregRoberts and Erik!
Eric deCarbonnel, at MarketSkeptics.com, also came out with an interesting article on gold yesterday that folks here might want to check out. It’s entitled “Excellent Opportunity to Buy Gold”, and is at http://www.marketskeptics.com/2009/12/excellent-opportunity-to-buy-gold.html. In it, he included some charts which he originally published back in July, which he claims illustrate the manipulation in the gold market. The charts show the action in gold associated with each time zone. What is interesting is that Eric is able to make some fairly consisten observations regarding what types of actions typically do (and do not) occur in gold per various time zones. Once Eric establishes this background pattern of gold manipulation, he then takes a look at the action in gold over the last month, to see if it holds true to the pattern. Here are the 1st couple of intro paragraphs. Check it out!
With gold prices having dropped from $1220 to $1080 in the last few weeks, it is time to examine what is driving gold prices down. However, before looking at recent charts of gold price movement, I want to point to an entry I made on July 5 on the manipulation of gold.
[His excerpt from July 5 entry:] For anyone out there who still doubts that gold prices are being heavily suppressed by the US and the UK, I have included a dozen gold charts I have saved up during the last few months (nearly all of May and June). By looking at these charts of the 24-hour spot price of gold, the meaning of “four out of five trading days over a one-year period the COMEX closed lower than the London AM fix” becomes perfectly clear.
Near term Gold has now consolidated and it seems the down side has been tested (in all currencies) resulting in higher lows.. This is especially evident with gold priced in Euros as it may even test previous all time highs.. The USD index will be something to watch..
The next phase of the credit crunch and what it means for gold..
Lets take a look at the technicals of various markets to see how this scenario could play out. Note the difference between Gold and the other markets.
Gold has very little overhead resistance while the majority of other markets are nearing strong and sizeable resistance. Gold has been consolidating and holding above support while these markets are in a tired and overbought state.
If sovereign bonds begin to break in the coming months, then Gold should benefit substantially. Obviously there are trillions sitting in bond markets and Gold is hardly a crowded market. Fundamentally, sovereign debt and currency problems are most bullish for Gold. Meanwhile, the technical situation favors Gold. As stocks and commodities struggle at long-term resistance, Gold, once it completes its consolidation, will have virtually no resistance in front of it. It is a potentially explosive situation.
Gold in Euros rises to new record highs. Renewed concerns over Greece.
Concerns about Greece have resurfaced amid a report that the country wants to amend a standby aid plan to avoid the imposition of onerous fiscal measures by the International Monetary Fund. The plan, formulated at a European Union summit last month, would see a combination of bilateral loans from eurozone countries and aid from the IMF if Athens is unable to meet its funding needs. Greek Prime Minister George Papandreou reportedly fears that added austerity measures that the IMF probably would require could cause social and political unrest. Papandreou reportedly wants to alter the plan to bypass an IMF contribution. Meanwhile, the Financial Times reported that Germany is at odds with other euro-zone countries over the interest rate on any bilateral loans that are offered to Greece under the plan. The Financial Times reports that Greece will target US investors with a dollar-denominated bond. Finance Minister George Papaconstantinou will lead a roadshow to the United States after April 20, but now no longer plans to travel to Asia.
Greece will this month launch a multi-billion-dollar bond in the US in its hunt for new investors, selling itself for the first time as an emerging market country as demand for its debt dwindles in Europe. This has implications for the euro as a global reserve currency and could lead to further pressure on the Euro.
UK Prime Minister Gordon Brown announced today that Britain will go to the polls on May 6, setting up a tight election battle over the UK’s battered economy and soaring deficit that could result in political gridlock. Markets fear an election deadlock which could make it harder for whoever wins the election to push through the tough medicine the UK needs to confront a budget deficit that is the highest amongst major economies. It would also make king makers of parties such as the centrist Liberal Democrats and Northern Ireland’s Democratic Unionist Party.
Australia’s central bank has raised interest rates to 4.25% from 4% as it attempts to cool inflation and slow rises in house prices
NEW YORK: Gold is near the final phase of its 10-year bull run, but prices could still climb as high as $1,300 an ounce in 2010 driven by higher investment demand, said Philip Klapwijk, chairman of metals consultancy GFMS Ltd.
The rise of gold prices is not sustainable because jewelry demand has dropped to less than half of total demand, and record investment buying at some point will fall off, Klapwijk told Reuters in an interview before the release of Gold Survey 2010.
“There are pointers to the fact that we are entering the final stages of a bull market,” Klapwijk said.