29/09/2010 by Philinje.

The Euro carried on to 1.36 with resistance possibly at 1.38, the dollar broke below 80 and gold broke above $1300.  Silver broke above 21.60 to finally get past its all-time high from March 08. Phew - the moment options expiration was over on Monday the buying pressure stepped in big time, despite a grand attempt to push prices down early Tuesday.

So yes, gold and silver look strong. It’s tempting to jump in, but how much farther is this likely to go? One target is $1420, another is $1350. So if that is attractive, then a small, tight position might make sense. A pullback is overdue but on the other hand there was a 38% retracement on Tuesday before the jump higher. The Euro could have a bit farther to go. Then beware a dollar reversal.

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23/09/2010 by Philinje.

There’s a pretty straight line up to $1300 gold and $21.50 silver. So does the line keep going?

It could. At least for a bit more. Let’s look at some surrounding factors:

The Euro is strong, and the dollar is down to 80 on the dollar index. The dollar is now below its last low in early August. So if the Euro gets to 1.40 then there is more room to run on the downside for the dollar, which could get as low as 78 on the USDX. It’s all-time low back in March 08 was 72-ish, and if it gets anywhere near there, that raises doubts about the dollar moving up any more.

But assuming the Euro moves higher and the dollar moves lower a bit more, before turning around, we could still see higher highs in the dollar. And there is some talk of a crash in equities in mid-November. Bonds might have topped or they might have one last panic-driven top in November.

It does look like gold could get to the $1350 projection that I talked about numerous times, very soon. But it depends on if equities keep rallying or some kind of panic sets in. Maybe we have some time before there is a crash.

In terms of mining stocks and silver, they are now approaching their all-time highs, finally. So if they breach those levels easily, then there is more room on the upside for sure. If they have trouble breaking through, they could lead a decline in precious metals.

Gold is showing strength in the face of a falling Euro and a falling dollar. So it’s definitely acting like a global currency safe haven. If bonds head south definitively, then money flows into gold could take a big jump.

So all in all, it’s good to stay in if you’re in. If you’re not in or you want to get back in, then that’s a tough call. Maybe we’ll have a short-term pullback soon and then using a small position with a tight stop could make sense. Otherwise, it could be worth waiting a month or two.

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15/09/2010 by Philinje.

It seems there was a lot of chatter yesterday about the Fed implementing new stimulus by extending the recent limited QE (Quantitative Easing) and that may have cause the dollar to tank. It seems currency traders are very jittery about the dollar and if it can’t be viewed as a safe haven (in the face of an impending market correction overall), there was flight to the Euro and gold.

As the dollar/Yen approached 82, the Ministry of Finance in Japan pulled the trigger this morning, now that Kan has settled in as the Prime Minister, and instructed the Bank of Japan to intervene. That surprised traders who were eye-ing 80 or 79 and the Yen has tumbled today, for some spectacular gains in Euro, pound and dollar/Yen. This was the first intervention by BOJ since 2004, when it seemd like Japan was America’s helper in keeping the dollar afloat.

As for gold, it’s hanging in there and might have some more upside. But it’s time to keep stops close on any trading positions (again, not recommended). It’s hard to imagine the dollar has truly lost its lustre as a safe haven, and if the s**t hits the fan, we might see some strong upward movement in the dollar. Whether gold will go down strongly in that situation is another question. It seems to be functioning much more like a safe haven than let’s say in 08, but on the other hand it’s at all-time highs and the big banks have tons of short positions to unload still.

So that’s my take on the action yesterday and today. More soon.

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14/09/2010 by Philinje.

Wow, gold took a big jump up in the past few hours, hitting $1274 so far. This seems to mirror a spike in the Euro. Which means a falling dollar. What exactly is causing this is not clear to me yet. But it shows the traditional inverse relationship between gold and the dollar.

Could this be the beginning of the move to $1350 - $1400? Maybe. Or it could be a temporary short squeeze with a subsequent drop.  Silver is clearly above $20. More soon.

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10/09/2010 by Philinje.

Gold and silver are holding up at their highs. Silver peeked above $20. Gold stocks were pushing near all-time highs, but just took a dip.

This could be interpreted as either: a decline could set in if current levels are not breached and equities crash, OR prices are ready for a breakout above these levels and then a major jump up.

Ireland is sounding pretty bad as a possible black swan. Someone was saying Britain could be the next shock to the system. The Euro is still bumping along the bottom and the Yen remains strong despite verbal intervention and some flooding of money in Japan. So all in all, I lean toward the former scenario.

Remember my theory about silver manipulation getting much harder because of scrutiny by the DOJ and SEC? Here is a rant in the Huffington Post that mentions this:

http://www.huffingtonpost.com/tom-pappalardo/gold-silver-trading-bigge_b_706594.html

Maybe the manipulation of previous metals is moving more and more into the mainstream. The clock is ticking on the enactment of position limits by the CFTC, and so far the big banks have not succeeded in taking down prices in any significant way.

September is here and so far there’s not much action. If you believe the Plunge Protection Team pumped up equities last week to get ready for September, then they’ve succeeded, so far.

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04/09/2010 by Philinje.

This piece is revealing:

http://www.businessinsider.com/pending-home-sales-reconfirm-the-market-is-crashing-2010-9#ixzz0yXiaElvC

Check out how the author comments on comments in the press at the end.

A great example of the value of blogs. The simple truth is, most people don’t know what’s going on because the press doesn’t know what’s going on.

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03/09/2010 by Philinje.

This morning’s NFP said job losses were not as bad as expected, and job gains in the private sector were slightly larger than expected.

The immediate result was a spike in risk appetite and and decline in gold. The dollar moved down and the Yen pairs moved up but have drifted down again. Even though oil fell, CAD is up against the dollar. And even though gold fell, AUD is up against the dollar and Yen.

Gold has bumped up against its recent all-time high this week, but it now looks like that level has been rejected. We could be in for a decline that’s signficant, though it’s too early to tell. Silver, on the other hand, is holding up and this week almost got to its last high near $20.

Considering that silver is especially vulnerable to manipulation, thanks to a highly concentrated and obscenely large short position by two banks, it seems to be holding strong. However, this may be due to the current sense that the economy may be ok, as seen in the new rally in equities. The S&P broke above 1100 this morning but has since drifted lower. That level could be a high-water mark in the months ahead. Or maybe we have a real rally unfolding.

One roadmap of the near-term future is as follows:

Equities stage a minor rally for a week or two. Then they fall again, and a market event - black swan, if you will - causes a big decline, scaring everyone into thinking about deflation. Gold may go down in that wave. Then the Fed announces full-blown Quantitative Easing, round 2 (or 3 if the current half measure is round 2), and that causes some move up in equities. But the dollar, after spiking in the crash, then drops like a stone and gold starts its final run to the heavens.

I kind of hope it plays out that way because it would be an excellent way to ride gold. But this is conjecture. The dollar is weak enough right now, and yet again we see gold dropping against a rising Euro. So we may see gold act as a safe haven during a general crash. And then, there may be no crash and equities conclusively prove they are on the recovery path.

Summer officially ends on Monday in the US. Then traders are back to work in force and volumes should pick up. The rest of this month should be interesting. The true reality should be evident soon.

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