While the entire media spin is that gold rallies on bad economic news and goes down on good news gets sold over the airwaves, to us the positive US economic reports yesterday gave gold enough of a boost to hold at the lower 1370 area and push up to resistance in the 1388-1394 region as US Retail Sales came in better than expected yesterday and Weekly Jobless Claims declined. While its true that gold goes up FOR A DAY OR TWO on bad economic data, the fact is that the global economy is sputtering and gold has been selling off on that factor all year. Its become clear that QE has NOT revived the economy and we believe that is what gold wants.
The problem as we laid out is all of these reports are so screwed up now that they are just used as launce vehicles for the control boyz.
The revelation this week that the CURRENCY markets are also corrupt, and front run and as we know intervened when governments want is just another point that all markets are “MANAGED” to a degree for the desired outcome.
The FOMC meeting scheduled for early next week, has traders reluctant to press too far in either direction. The risk is that if little news comes out of next week's meeting, then there could be a reaction in the other direction.
The argument for the Fed to begin tapering soon is an “experiment” by the Fed as it wonders if it will ever be able to stop printing. The answer to that is..... NO. Any way you slice this watermelon, they will tax, borrow, confiscate, and intervene, and manage in whatever way they need to and try to keep the lead balloon in the air and at the same time try not to pop it.
India's gold imports fell from $135 million in the first half of May to only $36 million by the second half. The “SPIN” media indicates that the government's attempt to discourage imports through higher duties has worked is a pile of baloney as all t has done is increase the amount of smuggling. What India’s government is trying to do is stop the move into gold due to a very weak currency. They have about as much chance of discouraging gold consumption in India as Mayor Bloomberg in New York or Burger King has in discouraging people to stop eating hamburgers and fries at MacDonald’s.
Gold is entering what is usually the quiet period where everyone goes on vacation, and the Indian wedding season is down until late August and the ramp up of Christmas demand is still a bit away from the “ordering” season.
With the huge decrease in open interest, as the COT reports last week indicated that the large and small speculator net long position in gold had fallen to 66,000 contracts from a peak of 331,000 in August 2011,gold finds itself choppy and overlapping and trendless at the moment. Obviously it can change at a moment’s notice, but this is typical for this time of year.
Total gold ETF holdings have dropped now for 17th straight weeks decline.
The CME group reports that Chinese equity markets finished their holiday-shortened week with a moderate recovery, as the Shanghai A Share Index closed with a gain of 0.65%. The Japanese Nikkei rose by 1.94%, which has helped to calm down global risk anxiety and improve risk attitudes for many markets. European stock indices are generally higher this morning, although the Italian MIB was posting a fractional loss early today. Euro zone Inflation during May was up 1.4% year-on-year, in-line with market forecasts.
Gold Chart
Gold is very choppy and overlapping and we arrive today exactly where price was last Friday at 1388 as there is no real defined trend. What we do see is a well defined DOWNTREND that has been in play for a long time. Gold has spent most of the week fighting these first resistance lines of the short term downtrend. Until gold gets a solid close above the Yellow dotted lines and then the 1425-1440 area the overall trends will still be down. We are however approaching the end of seasonal weakness and into strength during a transition from the end of June to end of July that has produced the best rallies we’ve seen in gold. But for now, choppy and overlapping is the current short term trend.
Resistance is the 1390-1394 and really up to 1399-1404 area in gold. Until we close above 1404, the short term trend remains down. Support is the 1368-1375 area at the moment on a daily basis but the chart shows that the 1353-1363 area at the yellow and purple lines are weekly support. There is additional support at 1337-1342. In summary, the short term remains down but important short and medium term cycles are coming due and we’ll discuss them next week. With the FOMC meeting next week, gold is likely to remain in the current trade range of 1370-1404.
SILVER CHART
The story is the same in silver. Until we break above the resistance lines on the chart the trend remains sideways to down. Price is in a wedge and we’re at the apex. A break to the downside would favor a test of the lower trend lines on the chart.
In summary, it comes down to the FOMC meeting next week and what the SPIN that comes out of it and what the CONTROL boyz do.
YOU SHOULD NOT TAKE ANY MATERIAL posted on this BLOG AS RECOMMENDATIONS
TO BUY OR SELL GOLD OR ANY OTHER INVESTMENT VEHICLE LISTED.
TO BUY OR SELL GOLD OR ANY OTHER INVESTMENT VEHICLE LISTED.
Do your own due diligence.
No one knows tomorrow's price or circumstance.
I intend to portray my thoughts and ideas on the subject which may s be used as a tool for the reader.
I do not accept responsibility for being incorrect in my speculations on market trend.
I intend to portray my thoughts and ideas on the subject which may s be used as a tool for the reader.
I do not accept responsibility for being incorrect in my speculations on market trend.
King Regards
