Attention Gold Buyers
I’ve had this nightmare dream before; I’m driving along
and everything’s fine and then out-of-the-blue the rocks come falling down
crushing my car and me inside. You wake up and realize it ain’t happenin’, but
nonetheless for a few seconds it’s a little disturbing.
How many times have we seen this scenario: sharp rally,
crush shorts, turn common tech indicators bullish, get public long [again] at
or near the top within 100 hours?
As the world falls apart and specifically Europe
implodes, the smartest people in the room have just bet, in the last 48 hours,
that Weimar Ben will hit the Cntrl-P button over at the Mariner Eccles building
and start QE3 in June. If we don’t get it, a whole lot of people
are gonna be trapped inside my dream.
I’m going to go out on the proverbial prediction limb here.
I think we have seen the low in gold up and until the Fed
meeting in June. I can see about 1550-1557 on the low side and maybe 1610-1625
on the upside until then. But here’s the rub; if we don’t get QE3 from the Fed
in June, and 1530 -1525 subsequently gets taken out, we are headed for a major
debacle in price on the downside. And with that comes many months of price
congestion and basing before gold can ever hope to go higher.
Around the 1580 level and higher today I have seen the
“nibble nibble BOOM!!” phenomena from the Central Planners. There’s no doubt in
my mind they were heavy handed in the market today. What do you suppose that
means?
While the entire world goes ga-ga over the FaceBook IPO
today [expecially California State Tax
Apparatchiks], Greece is
toast, Spain
implodes, and European GDP is falling rapidly. Granted we needed some kind of
rally because so many people have piled into the short side of gold.
[Here’s a thought; what if FaceBook opens higher and closes
lower? What happens then?]
But remember this: in a bear market [not just gold but any
market] the rallies are killer – they come out of nowhere and they are vicious
– and they convince a whole lot of traders that the trend has just changed and
now we can pile into the long side of the trade. If you look at a daily chart
of gold this is the type of action we have seen since 1800.
Ultimately, after the stupid money has piled into the wrong
side, price rolls over and we get the rinse & repeat cycle we have seen ad infinitum nauseum since last Fall; buy the rally get stopped
out [pick number of days here ___ ] later.
You can rationalize a lot of things, but you can’t ignore
the math; Europe is complete toast and the U.S.
[add Japan
too] is next. Stocks are so overvalued, pumped up via the Fed to get Chalky
Soetero reelected, and give the illusion that things are just fine.
We have started to see stocks roll over world-wide; practically
every major stock index is lower on the year. When the complete “risk off”
comes, just remember gold isn’t immune.
Meanwhile … Chuckle of the day before the weekend.
Have a good weekend everyone.
-vegas
Update 3:15PM Chicago Time
In case you were wondering why I have Friday rules, I
present EURUSD as prima facie evidence of what the Central Planners can do when
conditions are thin and stops are on the plate. At 2:00 P.M. we had a melt up
stop hunt in the EURUSD of about 60 pips within a few minutes on zero news.
Whatever can make your weekend can destroy your weekend. I
wonder how many Euro traders are crying in beer as I write; only it won’t just
last a few minutes, it will be there all weekend into the open on Sunday night.
Been there done that once in 1980; ain’t ever happened since.
Sometimes it may seem to those who are new to trading and
creating wealth that my methods can be restrictive and that I may miss some
profit opportunities for no apparent reason. Lesson #1; first do no harm, then
make money. I rest my case.
The Dow 30 closed near the lows of the day as FaceBook
closed at $38. Another pump and dump scam Ma & Pa Kettle will eventually
lose money.
Over the weekend [probably Sunday] I’ll have a special post.
Tune in for details.
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