30/06/2010 by Philinje.

I recently came across a bizarre website and theory that is exactly the kind of thing you can find on the net - someone with a unique view but no easy way to tell if it’s credible, aside from making a judgment on what the person presents and how he presents it.

Here are a few pages that encapsulate this person’s theory and detective work:

http://www.roadtoroota.com/public/190.cfm

http://www.roadtoroota.com/public/120.cfm

http://www.roadtoroota.com/public/117.cfm

http://www.roadtoroota.com/public/101.cfm

Here is the theory in a nutshell: Reagan established the Gold Commission in 1981 and that set in motion a plan to re-base the US currency on gold, lead by none other than Alan Greenspan. Because of the enormous political difficulties of implementing this plan, some proponents are secretly enacting it and starting to spread the word cryptically. Hence the comic out the Federal Reserve, Boston.

There is a kind of perverse logic in Greenspan throwing the current system into its final throes of self-destruction.

Who knows?

Meanwhile, equities are re-visiting recent lows and the S&P is hovering right around the critical 1040 level. Gold is hovering around $1240. The USD is still kind of weak though it did catch up on the CAD.

It’s a weird but tense moment of temporary equilibrium. And it’s impossible to say which way things will break. At least the theory above adds some color to the strange financial condition we now live in.

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29/06/2010 by Philinje.

It’s interesting how gold got taken down hard yesterday before the news broke today about the ECB not exending liquidity for European banks.

Let’s see… today equities are down 3% and gold looks like it isn’t benefitting from a flight to safety because it lost $30 yesterday. Mighty strange behavior indeed.

Draw your own conclusions. Mine is that the banks anticipated the carnage today and kicked the legs out from under gold to make sure it didn’t run away to the upside.

Supporting this view is the fact that the dollar is relatively weak. Sure, the Euro has suffered but it’s still at roughly 1.22, well above where it was when equities were this low last time. The pound is hanging tough, and the dollar is sinking against the Yen. And considering oil is getting whacked, the dollar is hardly rising against the CAD.

On the other hand, Euro gold got whacked yesterday of course but is climbing quickly today and looking like it just hiccupped slightly. After the last NFP, with the pathetic new jobs figure, the dollar has been in trouble, and the banks know it.

It’s very late in my day but about lunch time in NY and it looks like dollar gold is catching a bid. So far, it seems that another round of manipulation has kept the safe haven play muted, but just barely.

Last week was an exercise in gold dropping then regaining the same level above $1250 by end of week. It seems like the manipulation game is not really working. At some point, something’s gotta give.

That’s just my view, of course. You can - and should - draw your own conclusions.

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23/06/2010 by Philinje.

The pullback happened but so far there has been no sharp bounce back. It’s possible gold will head down into end of month and then move up in early July. Tough call.

Equities are in trouble again and gold might see safe haven movement quite soon, so I’m not giving up yet on a continuing move up. But so far this week it’s languishing. Around 1230 is the level where a shallow retracement would be expected to end, and it is there now. So we need to see what happens today and by end of week.

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20/06/2010 by Philinje.

Wow. Gold broke $1250 for the third time (well, there were basically three major attempts in recent months) and closed above $1250 for the week. Pretty auspicious.

It’s clear that $1250 has acted as the major resistance level in this move to new all-time highs, not the former all-time high of $1234 or so last December. And often, it takes three tries at least to break through major resistance. Until Friday. there was the distinct possibility of the chart looking like it had a double top at $1250.

The gold stocks surged on Thursday and Friday, kind of like the good old days when they would make 2 to 3% moves a couple days in a row, acting as the lead on a bull run. It’s been a while since that’s happened. The gold stocks, like silver, have been half asleep as gold has marched higher, causing many to wonder if the gold stocks and silver were signaling a non-confirmation.

We’re not out the woods yet, but close. If gold stays above $1250 (maybe dipping down to $1240 or so but moving quickly back up), then the technical signs will be ALL GREEN. That means a lot of traders will pile in, and short covering may cause a parabolic spike.

With global tensions as they are, we might see some fireworks this week. The reason I want to see $1350 is not because of the potential profit, but because that will signal the confirmation of a target, and that means a conservative approach is to step aside, at least in part.

The conservative part of my nature is why I like gold, but that part of me doesn’t like the escalating risk in global markets. While gold could melt up as everything else melts down, I am just not confident of that. So my preference is to see the $1350 target sooner rather than later and reduce risk in every possible way.

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16/06/2010 by Philinje.

Yesterday there was more strength in the markets overall, and it looks like gold is participating once again in the reflation trade. This means as the dollar goes down, gold goes up.

So yet again, it looks like gold will benefit from rising or falling markets. Amazing! In a sense that has been happening all along, over the past 10 years, because currencies are being debased. No matter which particular currency is rising or falling, gold on the whole has been going up.

Here’s a fascinating article from James Turk, founder of GoldMoney. He is obviously biased, but the chart speaks volumes:

http://www.fgmr.com/signal-from-the-stock-market.html

The chart in this article shows clearly how Quantitative Easing by the Fed has been closely correlated with movements in stocks. It’s uncanny how close the relationship is.

The current bounce may go a bit farther and then various analysts are worrying about a massive decline into August. But some are thinking we’ll see a modest climb over the summer, and then a mild decline this fall. It might depend on QE. If the Fed reinstates QE, expect markets to rise. And we hope in that case gold will benefit from the reflation trade.

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13/06/2010 by Philinje.

Gold bounced around a bit after its big surge up last Monday and settled at roughly the same level, around $1230. On Thursday silver got a boost from the early tremors of a rebound in the general markets. Oil also bounced up a bit, and the Euro seems to be stabilizing above 1.20.

However, we may yet see some big moves down by end of month in equities. Be very careful. The support level of 1045 in the S&P is one to watch. So far any attempt at a bounce has been quite mild. So yes, there could be a big rebound soon, or we could have another devastating wave of bearishness. All we can do is wait and see.

So far, gold is holding up even with a retreat of bearishness. If a rebound takes shape, then the dollar could drop and it will  be interesting to see if gold resumes its inverse relationship to the dollar. This past week and recently it looks more like gold and the dollar are moving more or less together as newly united safe havens.

Bloomberg recently ran a comprehensive article on the European sovereign debt situation. The piece is fairly balanced if you read it to the end. Either a Greek default is inevitable, or it’s been priced in and a larger collapse has been averted. Who knows? Here it is:

http://www.bloomberg.com/apps/news?pid=20601087&sid=avhINInuvuzE&pos=2

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08/06/2010 by Philinje.

Monday we finally got the surge in gold that was an indisputable sign of bullishness. Today gold is knocking on $1250, the recent all-time high, and if it clears that we’re off to the races.

In case you’re wondering about gold mining stocks, here is a good article that presents the big picture and the recent picture:

http://www.gainspainscapital.com/

Basically, mining stocks seem to be separating from general equities, though they have not broken out in the way gold has, yet.

The same large inverse Head and Shoulders in gold basically also exists in mining stocks, and there is a projection to 600 in the HUI. But they have not yet cleared their last all-time above 500. In fact, they have behaved much like silver and have been somewhat muted on the upside of late. But that also means they could have further to go.

It’s possible we’ll see the S&P visit 1010 before there’s a rally in equities. It’s also possible we’ll see the Euro visit 1.18 before it rallies. That may be the window in which gold shoots to  $1350. We’ll see. It’ll be interesting too when the dollar drops. Could be good, or could be bad, at least initially. The dollar has gone parabolic in a bearish rising wedge. But it could still go higher from here.

Buckle your seatbelts!

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05/06/2010 by Philinje.

Just a quick follow-up to my last post: it looks like there was a battle at $1200 that took the price back and forth between $1205 and $1196 for a good 5 hours yesterday morning, starting in European trading. Then at about 11am in NY, gold broke through to the upside and settled right back at $1220.

It’s interesting that silver got taken down without much of a fight. There’s some strong buying power in gold that can fight back when the big boys play their games. Next week should be interesting.

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04/06/2010 by Philinje.

Earlier in the week Obama leaked the news that today’s jobs report, aka Non-Farm Payrolls, would be strong. Everyone was expecting the one-time adding of census workers to be part of the number, but it turned out to be almost the whole number! I think this little episode speaks volumes about how desperate Obama must feel and how tenuous the recovery argument really is.

It looks like there has been very low volume in gold this week, which is concerning. And yesterday, the big boys took gold down a few notches toward $1200 just in case the NFP number disappointed the market. Well, they were right, but so far there hasn’t been any big move in gold. In fact, it seems to be stuck just above $1200.

Well, that is a dent in the argument that gold is behaving like a safe haven. Heck, earlier today the Euro dropped below 121 on worries that Hungary would face a sovereign debt crisis. And hardly a blip in gold. Very strange indeed. Silver is getting seriously whacked but volume is still pretty low in both metals.

Hmm. My plan is to give gold until late this month, and then start moving aside. There is too much risk out there in the markets, and if things get very ugly, gold could suffer, albeit less than other assets. The point is we could see some very strong moves in the dollar and Yen if markets start swooning in an even bigger way than currently.

There are some cycle theories that talk about a major crash in mid-August. If you’re really brave, you could hang on till then, but I suspect we’ll see some evidence of major weakness before then.

On the other hand, Martin Armstrong just released a report that talks about strong markets this summer and that there may be weakness but no crash in August.

Take your pick. It’s a crazy world.

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