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In sumple terms, the prcie of Comex-Gold is dropping because it isn't gold. It's only a derivative of gold.
Probably not. It is reassuring that gold did not simply continue to fall through this level, but the real short-term test will be whether gold can manage to climb back above its 200-day moving average, currently at $1,623.
However, that is all on the purely technical side. Again: as long as the euro situation is not resolved and money managers still own gold which they can turn into cash to pay off investors selli8ng stocks, the fundamental situation will not change.
I am not really worried about Indian and Chinese demand, here. When money managers hit the panic button and start selling more gold as the euro finally disintegrates, the Chinese (and to a lesser degree the Indians) will be there to buy. That may happen well below current levels, but it will happen. at those bottom-of-the-barrel prices, China and India will not be sellers of gold.
We have arrived at my initial downside target of $1,550/oz. for gold. Gold's downside is not going to end here, I'm afraid. I can see it going down to $1,400 in the near term.
For those who own gold and gold-related investments, this is a test of your nerves. If you get out now, you will chew up your own rear-end when the COMEX Price starts shooting up again. DO NOT fall into this trap.
There is anecdotal evidence that the real people (individuals) are buying gold like crazy. Money managers and bullion banks are selling because it's their only way of maintaining the calm and keeping investors from ditching their stocks and bonds for gold. Interestingly, central banks are not selling. What is really going on is record gold-LENDING.
Only gold owners with strong hands will survive this. I read some dimwit proclaiming that gold is "supported" as long as the euro crisis persists. That is absolute and utter hogwash. Until the euro is dissolved, there is no sure-fire upside for gold, unless money managers get wise and start buying into bullion bank liquidation. Poor fools. They are so locked into the system that they cannot see beyond its distorted paradigm.
All the better, then, for those who can.
Read this article by Floyd Norris at the New York Times: A Central Bank Doing What It Should. It is a must-read.
Nevertheless, the word "solved" has to be taken with a lump of salt because the problem, if it really is solved, has only been "solved" within the frame of thinking of central bankers and the pro debt-money crowd. Nevertheless, it may well be that the ECB's action has now delayed the inevitable for another few years. Whether that is so, remains to be seen, of course, but now that is at least a distinct possibility, up from a sure-fire IMpossibility.
Regardless: everyone interested in the subject needs to read this article.
This morning's $20-plus upswing in COMEX gold prices is a sucker's rally. Nothing in Europe has been resolved yet, and the "surge" in US housing starts consists of apartment buildings to satisfy the demand resulting from foreclosed-upon former home owners.
There is still more downside to gold. What is significant' however, is the USD's inability to make a meaningful foray into the area above the 80 point level on the USD index. With all the trouble in Europe and the dollar's now unchallenged status as the world's sole reserve currency, it should be exploding all over the place. The fact that it doesn't should give dollar bulls and gold bears lots of pause.
Why? Because the financial press is super-charging the decline with negative commentary - which money managers across the globe will surely follow.
One case in point is this article from Yahoo Financial's "Breakout": Gold Plunges: The Trend is Not Your Friend!
It's getting pretty close to my hunch-line of $1,500 gold. When it breaks below that, all bets (charts) will be off. We could see prices as low as $1,250.
Never count out the fundamentals. They will inevitably reassert themselves. The world's money has no alternative. Currently, it is flowing into the US dollar - but when that house of cards falls, it will flow back into gold - whatever will be left of "the world's money" at that time, at least.
The gold chart is showing a "perfect" pennant consolidation pattern right now, and we are only days away from the breakout point:
(You can see the larger pennant with the baseline going back to February this year sets the breakdown area to the bottom somewhere in the high $1600s range, while the tighter-drawn pennant with baseline starting in mid-October shows yesterday's close being right on the breakdown point. Today's action (Friday, December 9, 2011) will decide whether the next move is more sideways action or down. If it's down, it will go deep! If the move breaks below the fatter baseline, it will be VERY deep bafore going higher again.)
Not really coincidentally, this coincides with the upcoming European summit on the (hopeful for them) continuation of the euro's artificial life line.
The outcome of that summit will determine the near-term fate of gold - but in which direction?
There are several possibilities, of course. My personal guess (and that's all it is at this point) is that the summit will ultimately fail and gold will at first drop like a rock and then recover very quickly.
However - and that "however" is spelled with a capital "H" - I am quite confident that the outcome of the summit will initially be hyped as "positive" by the press, which will cause gold to shoot up along with world stock markets as it has in the recent past.
After that, the reality will begin to emerge that the euro is just plain dead. At that time, all money will rush into the dollar and gold will drop, but once the initial thirst for cash is satisfied, money managers and hedge fund managers will look for a safer place long term, and that will inevitably be gold.
The coming days will be violent in both directions. Hold on to your britches! If you are in physical gold, this is NO reason to sell. If you are lucky enough to have a big stash of cash at this time, keep it dry until the whole thing shakes out. DO NOT get suckered into the first violent move! it is very likely to be a fake move. Beware!
December 8, 2011
Here is one reason why the current upswing in world markets means absolutely nothing in the grand scheme of things related to the euro's ongoing demise: NY Times article.
International institutional investors have been withdrawing money from the big European banks because of their huge exposures to bad sovereign debt like that of Greece and Italy (i.e., the PIIGS). That lowers these banks' ability to lend.
On top of that, EU regulators are demanding that the banks hold more cash per money lent, which further reduces their capacity. Without easy credit, the entire debt-dependent economic system of Europe cannot function and will further (and faster) slide into recession as a result.
That, in turn, causes a decrease in Europe's demand of products from abroad. Europe is China's second-largest "customer" behind the US, for example. This European debt crisis can only get worse. Only massive inflationary efforts by the ECB can temporarily halt this process, and that is precisely what world leaders are screaming at the ECB to do.
Unfortunately, under current EU treaties, the ECB doesn't have that ability. Actually, bulwarks were intentionally erected in the design of the ECB and the euro system so the ECB could NEVER inflate the euro to such an extent.
It's do or die for the euro, and "do" only means a somewhat slower death. The PIIGS' situation is so dire that the time needed to rehash the entire ECB/euro structure is simply not there. The already present and mounting flood of bad debt is crushing the dam - and the dam was never intended to have to deal with such pressures. When it breaks, all hell will break loose.
It will take some time until institutional investors figure out that gold is the only place to flee to in a situation like that. Currently, all they see in gold is a great way to cash in on recent gains in order to pay debts that are coming due.
They'd rather draw down on a winning investment to pay their debts (i.e., investors withdrawing money from their funds) than to liquidate their other, losing, bets. That's why fold is moving in sympathy with the general stock markets right now.
This downside of gold is limited by retail investor demand from places like China and Venezuela. (It's so ironic that communist countries value gold more than capitalist ones these days).
At any rate, gold will dive along with the stock markets at first when all of this hits. When it all bottoms, that will be the time to buy more gold. It is difficult to call where gold's bottom will come to lie - but it sure isn't where we currently are, at or near $1,700/oz. In my personal opinion, which is nothing more than a hunch at this time, at minimum, gold will drop to $1,500 before it rises again.
You thought you'd never hear this from me, but this is NOT a good time to buy more gold, or to get back into the game if you have been out. It's nothing but hype about a supposed debt "solution" from Europe. It will not work.
This morning, gold is up over $30. So what? Gold has quite a bit more downside before it will get in on its next up-leg. I'm guessing about $1,500 or so. This is a sucker's rally today, Monday November 28, 2011. I'm writing this at 6:30 am.
It's amazing how little the dollar has actually benefited from the impending collapse of the EU's monetary (and potentially economic and political) union - and how little gold has suffered as a result:
Put into long term perspective, the calamitous developments in Europe have not even helped the dollar regain it's (once) all-time low of 80 on the Dollar Index scale:
What does that mean?
Gold obviously has not seen the benefit of this move out of the euro, and the benefit the dollar received is very limited - so where did all the money go? If it went out of the euro and out of gold, and it didn't go into US stocks, it only could have gone into other currencies. More on that later.
But first, the big question is where will all of it go once the euro has finally crumbled and the dollar has received all of the benefit it can hope to get?
In the medium to longer term, parking your money in the dollar or other currencies is like moving your car from the railroad tracks to a known quicksand hole to keep a speeding train from hitting it. You don't want to leave it there for too long.
When the music finally stops, whatever debt-money is left at the end will have to settle on the only investment chair left - and that is gold.
A page with charts showing the gold vs dollar relationship since the year 2000 and beyond.
If you read and watch Kitco news, you will be left with the indelible impression that gold has seen its peak and is headed for the $1,200 if it breaches the $1,550s.
That could well be true - except for the reasons offered, and in fundamental analysis, the reasons for price movements are all-important.
Many question why gold appears to have lost its traditional safe-haven role when everything seems to be headed for the toilet as a result of the European crisis and the fear of the unknown associated with it: will the euro crisis pull the rest of the world with it?
However, the news that super-hedge fund Paulson & Co. has been selling, selling, selling its Gold ETF positions in GLD should give anyone pause. Is Paulson simply smarter than the rest of us and more foresightful - or is he laying the groundwork for efforts to pooh-pooh gold in investors' minds so they won't abandon the world's paper and electron-based fiat structure in favor of true and lasting (i.e., "performance"-independent) security?
To me, this is a huge buying opportunity, not a selling frenzy. Let the weak hands who don't know why they are holding gold sell and allow the strong hands (minds) to fortify their positions. It is how markets work, after all.
Paulson has sold about 1/3rd of his GLD stash so far. Will he go further? Probably, if the need for the system to continue ends up overriding his profit motive. Obviously, anyone with that large of a position can move markets.
To me, it's fundamentally an issue of trust: whom do I trust more - those at the helm of the fiat superstructure - or ordinary market forces - especially in the age of unprecedented upheavals and the potential for near-total collapse?
My bets are on gold.
The EU debt-contagion is doing some short-term damage to the gold price today, but there is nothing to worry about. Gold still sits nicely near the top of its two-year uptrend channel:
Judging from the 2009 experience, when Europe finally blows up completely and the US stock market tanks along with it, gold will drop right along with them, but then will recover far faster than any other asset, so - don't sell out at the bottom the way all those "weak hands" are usually doing it.
Retirement sentiments can qickly turn negative when you nolonger have the means to finance your golden years. Learn here how to turn that trend in your favor.
These days, a gold ira is the only retirement investment option with reliable upside potential.
Pass the 'Government-Lobby Liberation Act' and corporate-government corruption will cease.
One of the best remaining retirement investment options is a gold-funded IRA account.
A page of charts showcasing the stady rise of gold vs. international stocks.
Because the continued upside for gold is dictated by global monetary policy, gold is every retiree's best friend.
Access page to Euro vs Dollar Monitor Subcribers' Members Resources.
Compilation of reports about and analyses of the mounting international credit ratings scandal.
This page exposes stupid press stories in the financial world and politics.
Comex-traded US$-denominated gold will bottom when stocks hit bottom and the dollar returns to earth.
Indians have not really become 'anti-gold'. They are just undergoing a period of re-evaluation.
If you want to know why we are in the mess we are in, watch this video. Doing so will also help you figure out the solution to the problem.
September 2008 Weekly Updates & Forecasts of the Euro vs. Dollar & Gold Monitor
One by one, they go 'poof' just like magic - because that's how they were created.
Gold clauses in contracts have been legal and enforceable since 1977. Now, a US federal appeals court decision has put them back on the map.
A single global currency would be a good idea - but only if it consists of gold and silver bullion. This article explains why.
A single global currency would be a good idea - but only if it's gold and silver. This article explains why.
If you feel you are too poor to afford the regular subscription price for the Euro vs. Dollar & Gold Monitor, check this page.
We are witnessing an undeniable, honest to goodness, gold and silver shortage mounting all over the world, providing a hilarious spectacle of would-be controllers utterly losing control.
'What Price Gold?' is the question that can only be answered when gold owners decide at what premium over the illusory 'spot price' they are willing to sell into the current shortage.
The question is silly. Gold doesn't
Russian sub and carrier groups are positioned in the Mediterranean to oppose the attack, while Iran has been readying its highly advanced biochemical warfare capabilities with the help of formerly-Soviet Russian scientists who were out of work after the collapse of the Soviet Union.
The bio-weapons are likely to be released by stealth in the US and Europe after an attack. Reportedly, plans in these countries are to simply lock populations down and let the infected die off, as there is no real defense against these weapons and they do not require military capability for delivery in malls and at other large gatherings.
Can you see what your lethargy and failure to restrain your elected officials is doing to your country and the world?
Congress is the body that allows the president to go forward with these types of plans. Worse, Congress has recently ordered the president to pursue this action (See H. Con. Res. 362)
Thanks to this, you may never get another chance to vote these traitors out, but if you do, by God, you had better fire your own Congressman/woman this fall, or else you will be as responsible as Bush and Cheney are.
Go to VoteSmart.com to see how your congressional incumbent voted on laws like:
and many more.
Ask your favorite news network why they are not reporting on this - and then stop reading and watching their meaningless, deliberately deceptive garbage.
Do you know what the media blackout means? Compare it to the media circus leading up to the second Gulf War. The blackout tells you that our politicians know that the country is opposing their plans - and that they don't care. They will attack, anyway.
Want confirmation that this is real? Try this August 7th article from the Jerusalem Post as to the bare-bones facts, and this article in the American Chronicle as to the US strategic thinking behind it all.
These are your past votes and tax dollar at work! Time to take responsibility and the political reigns back into your hands - or else.
Page with links to weekly updates to Alex Wallenwein's Euro vs Dollar Gold Monitor.
The euro is 'radioactive' in the sense that it causes the US national currencies to disintegrate and become more like itself.
Congress has passed every single freedom-destroying law on the books, and it refuses to invalidate overreaching executive orders. They all need to go.
"Euro vs Dollar: The War on Your Wallet!" and "The Dollar-Crash Survical Toolkit" available here.
National Australia Bank or 'NAB''s recent $830 billion write-down of US mortgage assets will roil Wall Street and may cause a banking collapse.
Get a free copy of this hard-hitting, revealing Euro vs. Dollar Report, just for answering a few, simple questions.
Resource page for investors interested in gold and other precious metals.
Initiative to build support for Congressman Ron Paul's HR 2756 and HR 4683 to restore sound money to the US economy.
Good Faith and Credit - or Empty Rhetoric and Debt?
Confirmation page for EvD Report
Papa Bear, Mama Bear, and Baby Bear are home from their walk in the woods, now. They find the ‘goldilocks economy’ sitting on their gold stocks and unceremoniously decide to eat her. End of story.
Indians who are waiting for lower prices are missing the train. Those who sold their gold for regular stocks have unwisely tied themselves to the tracks - in front of the oncoming train.
The question should really be: 'what kind of a recession are we slipping into?'
Are you a US importer of goods invoiced in euro? Get your free copy of this crucial report now!
"2 plus 2 = 4" is too much to stomach, for some people - but the truth a a matter is not determined by how hard it is to accept.