Wednesday, November 4, 2009

Gold: Kickin' Ass And Taking Names

"The last duty of a central banker is to tell the public the truth."
- Alan Blinder, former Vice Chairman of the Federal Reserve

What a difference a week makes. November, seasonally Gold's most explosive month opens with a big bang. A week ago we were testing 1024 support in Gold, and today we're taunting resistance at $1100. Gold has run hard and fast buoyed by last week's $153 BILLION debt auction, and this weeks surprise 200 tonne bulk Gold purchase by India. The Fed today guaranteed the money spigots in Washington will remain wide open, and this too added to the short squeeze of the CRIMEX goons we have longed for.

Buyer Beware! The non-farm payrolls report prints at 8:30AM est on Friday. This has been a notorious "drop zone" for the goons to take a free swing at the Gold bulls. Recall the dump leading into the jobs report the first Friday of October... There is a BIG difference on the charts this time going into the payroll numbers. Last month Gold was near support at the bottom of the current uptrend channel we've been riding in, leaving little room for the goons to push Gold down. THIS month Gold is near the top of that trend channel, and the goons would like nothing more, right here, than to toss the Bulls back down the mountain. Top to bottom the trend channel is $50 high.

Support at $1070 should give the Gold Bulls some confidence, but a breach opens the trap door. Expect action to be fast and furious. ANY move near 1040 could signal the last major buy opportunity through Christmas. Current projections take Gold to $1180 by years end.

A poor payrolls number should put a bid under the Dollar and pressure Gold as traders "run to safety" [yeah, whatever]. A good payrolls number should pressure the Dollar as traders seek more risk as the economy shows "more signs of recovery" [yeah, right]. Sounds simple enough.

Silver has been lagging Gold on this recent furious leg higher. Silver's lesser half, industrial demand, would appear to be the ball and chain. Gold is attempting to decouple from the Dollar now, and rise on it's own merit. Silver will eventually follow, and quite possibly lead Gold higher in time, but the Gold/Silver ratio [recently at 64] shows Gold in command of the Precious Metals at this time.

Silver is once again toying with a significant line of resistance/support at 16.45. This line represents the 62% Fibonicci retracement of the 21 - 8.50 crash of Silver in 2008. 18 is now the KEY resistance line on the upside in Silver. A decisive break of 18 projects a move to 24 by years end.

Silver set to Soar as it did in the 1970’s
By: Mark O’Byrne
Precious metals has been the best performing asset classes in recent years with gold and silver outperforming equities, property and most asset classes over a 3, 5 and 10 year period. This outperformance looks set to continue in the coming months due to the very bullish fundamentals. The primary reason for our bullish outlook on silver is due to the continuing and increasing global macroeconomic, currency and geopolitical risks; silver’s historic role as money and a store of value; the declining and very small supply of silver; significant industrial demand and perhaps most importantly significant and increasing investment demand.

Gold, oil and nearly every major commodity, stock indices and property market surpassed their record highs in recent years. Favourable supply and demand factors, continuing global macroeconomic and geopolitical risk and concerns regarding the emergence of inflation and stagflation as the massive global monetary and fiscal reflation affects the value of fiat currencies all point to higher silver prices in the long term.

In the 1970’s silver rose from under $1.50/oz in 1970 to nearly $50/oz in 1980. Thus, silver rose by more than 25 times or by more than 2,400%. Were silver to replicate its performance in the 1970’s, it would have to rise by more than 25 times again. The average price of silver in 2001 was $4.37/oz and 25 fold increase would result in silver rising to over $110/oz. While this price target may seem outlandish to some, it is worth remembering that silver’s record high in 1980 adjusted for inflation (according to US government inflation figures) was some $130/oz.

Scary Comex Silver Withdrawals: Will They Continue?
By Ed Zimmer
It’s bad enough that the silver backing the COMEX futures market is only 1/12th of the amount of silver that is under contract, but the day before Halloween dropped a new trick on things. Total Silver withdrawn on October 30th totaled a massive 3,627,012 ounces. More than two thirds of that amount, 2,585,384 ounces came off the Registered Side of the equation. Since the end of July 2009, the Total Registered amount of silver (silver held by depositories to directly offset futures) has fallen by 10 million ounces. The Friday drawdown was one of the largest that I have seen and would indicate that some of the players are in agreement with the thought that if you don’t have silver in hand, you don’t have silver.

Friday’s Registered silver was 52,695,755. Eligible silver totaled 60,985,505, Combined total of 113,681,260, the lowest level of stocks since 2006.

Gold: Something Powerful Is Building
"In religion and politics people's beliefs and convictions are in almost every case gotten at second-hand, and without examination, from authorities who have not themselves examined the questions at issue but have taken them at second-hand from other."

This quote from Mark Twain applies equally to investing and economics as well. We say believe not in what others tell you but in what the market is telling you.

I have recently signed on as an affiliate. I am very excited about this opportunity to bring my blog to a wider audience AND offer my readers access to a quality tool set for personal analysis of the markets. Please take some time to check out the latest video chart from president Adam Hewison discussing the latest move in Gold. And check out INO TV. Thanks.

The Decoupling of Gold

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