Filed under: Martin Armstrong
Dear CIGAs,
Armstrong’s latest article has no concern about the gold trend with the $5000 level still in his sights.
Click image below to open Armstrong’s latest in PDF format
Posted: Jan 04 2011 By: Dan Norcini Post Edited: January 4, 2011 at 7:56 pm
Filed under: Trader Dan Norcini
Dear CIGAs,
Gold and silver are starting off the New Year doing what many professional traders, myself included, expected them to do during the last few trading days of last year! They went soaring to the upside in front of the New Year and are just now experiencing a pullback as funds lift some longs and some new shorts are seemingly being emboldened by the notion of an “improving economy”. I was extremely surprised last week to see them shooting so sharply higher with new money coming into the market as the calendar year wore down to a close. Now it seems as if we are finally seeing some of that selling showing up during the first full week of trading, which again, is out of the normal pattern. Then again, not much of anything in these markets is “normal” anymore since the funds have taken over everything.
Some of this is rebalancing associated to the changes in the commodity indices that I mentioned yesterday but there is definitely a bit more to it than that. For whatever the reason, commodities are experiencing a general wave of selling today after the CCI went on to make yet another all time high yesterday. It’s not just gold and silver; crude oil, the grains, the meats, etc, all are seeing a wave of selling as the algorithms trip into the sell mode for the time being. We’ll just have to wait and see where the buyers surface in the sector. The “buy commodity” strategy will be in effect as long as the FOMC does not change monetary policy or scale back its QE2 program which based on today’s release of their minutes, suggests is not going to happen anytime soon.
Silver needs to find enough buying support to climb back above the $30 level to cement that as a base and prepare it for a leg higher. Failure to do so will drop it further and see it move down towards the $29 level. We’ll have to watch if it can entice some fresh buying should it move that low. From a bullish perspective, I would prefer that it not move below $28.50 for any length of time.
Gold needs to climb back above $1400 to give the bulls some encouragement for another try at $1420. I would not like to see gold get a close below $1380 as that would portend a deeper setback down towards $1365 or so. It is sitting right on the 50 day moving average which a lot of technicians watch so it will be important for the bullish cause for it to move up and away from that level quickly to keep the sentiment firmly bullish.
Momentum has been declining in gold making a series of lower highs as the price has moved up which has to be monitored as the hedgies are all about chasing prices either higher or lower depending on momentum. The huge buyers of the physical market could care less about momentum but they do watch such things in an attempt to determine if they will get further fund long side liquidation allowing them to get a better price on their planned purchases.
I read today that the US debt topped $14 Trillion which makes me shake my head in dismay when I hear talk about an improving economy. FOURTEEN TRILLION DOLLARS – we use to toss around the “billions” when referring to government debt; now we bandy the “trillions” around with the same carefree and lackadaisical sentiment. I keep hearing comments that as long as there is demand for US Treasuries, it shows that the US can continue to run these huge deficits and plunge itself further into debt because it is obviously not hurting demand for our IOU’s. That makes me even more incredulous seeing that most of the demand is coming from the Fed itself. Then again, I am probably an outdated dinosaur who naively viewed debt as something intrinsically to be avoided. The current crop of financial talking heads seem to think that being a creditor is a curse while being a debtor is a blessing. I must have missed something back in school somewhere.
I brought that up really to simply reiterate the fact that the only way this obscene burden is going to be eliminated from the shoulders of our children and grandchildren is by effectively defaulting through currency devaluation. We all know that; so does every other major holder of US Treasury debt on the planet. That is why I do not particularly care what happens to gold during these fairly regular bouts of selling. It runs higher; falls back, runs higher, falls back and just keeps repeating the process over and over again as it moves inexorably higher.
Those with a scintilla of a functioning mind can understand what the US monetary authorities are doing. But you also have to keep in mind that the Fed has powerful allies on its side – mainly all those who want to do business with it. As long as those seeking profits from being primary dealers exist, those who have a vested interest in seeing the current policies continue will be around to contend with in the markets. To be successful as a long term investor, you have to recognize the fact and then use that to your advantage. History is not on their side but short term, the size of their trading accounts is. Use their actions in the market during which they push and strive against reality to look for opportunities. Technicals win in the short run but fundamental realities always win in the long run – always.
Crude oil after putting in several closes above the $91 level, got whacked pretty hard during today’s commodity rout and thus far has not been able to pick itself off of the carpet. Let’s watch that, and copper, to see if market sentiment moves around to viewing some of today’s selling as overdone. If so, we will see buying coming in sometime tomorrow, perhaps right after the margin related selling is conducted.
Bonds are unchanged as I pen this but have been trading higher most of the day. If the Fed ever stops buying in there, the support levels will not hold but for now they have succeeded in having the shorts second guessing themselves.
The HUI needs to close through the 580 level to generate some new upside excitement. It looks like it has enough momentum to move down towards 540 and possibly 530 before we get some stronger buying. A push back through today’s session high near 561 within the next two days should shove it into a trading range pattern.
Click chart to enlarge today’s hourly action in Gold in PDF format with commentary from Trader Dan Norcini
$4.18 billion per day since September 28, 2007!
Concerned? Then tell Congress and the White House!
Armstrong’s latest article has no concern about the gold trend with the $5000 level still in his sights.
Click image below to open Armstrong’s latest in PDF format
Posted: Jan 04 2011 By: Dan Norcini Post Edited: January 4, 2011 at 7:56 pm
Filed under: Trader Dan Norcini
Dear CIGAs,
Gold and silver are starting off the New Year doing what many professional traders, myself included, expected them to do during the last few trading days of last year! They went soaring to the upside in front of the New Year and are just now experiencing a pullback as funds lift some longs and some new shorts are seemingly being emboldened by the notion of an “improving economy”. I was extremely surprised last week to see them shooting so sharply higher with new money coming into the market as the calendar year wore down to a close. Now it seems as if we are finally seeing some of that selling showing up during the first full week of trading, which again, is out of the normal pattern. Then again, not much of anything in these markets is “normal” anymore since the funds have taken over everything.
Some of this is rebalancing associated to the changes in the commodity indices that I mentioned yesterday but there is definitely a bit more to it than that. For whatever the reason, commodities are experiencing a general wave of selling today after the CCI went on to make yet another all time high yesterday. It’s not just gold and silver; crude oil, the grains, the meats, etc, all are seeing a wave of selling as the algorithms trip into the sell mode for the time being. We’ll just have to wait and see where the buyers surface in the sector. The “buy commodity” strategy will be in effect as long as the FOMC does not change monetary policy or scale back its QE2 program which based on today’s release of their minutes, suggests is not going to happen anytime soon.
Silver needs to find enough buying support to climb back above the $30 level to cement that as a base and prepare it for a leg higher. Failure to do so will drop it further and see it move down towards the $29 level. We’ll have to watch if it can entice some fresh buying should it move that low. From a bullish perspective, I would prefer that it not move below $28.50 for any length of time.
Gold needs to climb back above $1400 to give the bulls some encouragement for another try at $1420. I would not like to see gold get a close below $1380 as that would portend a deeper setback down towards $1365 or so. It is sitting right on the 50 day moving average which a lot of technicians watch so it will be important for the bullish cause for it to move up and away from that level quickly to keep the sentiment firmly bullish.
Momentum has been declining in gold making a series of lower highs as the price has moved up which has to be monitored as the hedgies are all about chasing prices either higher or lower depending on momentum. The huge buyers of the physical market could care less about momentum but they do watch such things in an attempt to determine if they will get further fund long side liquidation allowing them to get a better price on their planned purchases.
I read today that the US debt topped $14 Trillion which makes me shake my head in dismay when I hear talk about an improving economy. FOURTEEN TRILLION DOLLARS – we use to toss around the “billions” when referring to government debt; now we bandy the “trillions” around with the same carefree and lackadaisical sentiment. I keep hearing comments that as long as there is demand for US Treasuries, it shows that the US can continue to run these huge deficits and plunge itself further into debt because it is obviously not hurting demand for our IOU’s. That makes me even more incredulous seeing that most of the demand is coming from the Fed itself. Then again, I am probably an outdated dinosaur who naively viewed debt as something intrinsically to be avoided. The current crop of financial talking heads seem to think that being a creditor is a curse while being a debtor is a blessing. I must have missed something back in school somewhere.
I brought that up really to simply reiterate the fact that the only way this obscene burden is going to be eliminated from the shoulders of our children and grandchildren is by effectively defaulting through currency devaluation. We all know that; so does every other major holder of US Treasury debt on the planet. That is why I do not particularly care what happens to gold during these fairly regular bouts of selling. It runs higher; falls back, runs higher, falls back and just keeps repeating the process over and over again as it moves inexorably higher.
Those with a scintilla of a functioning mind can understand what the US monetary authorities are doing. But you also have to keep in mind that the Fed has powerful allies on its side – mainly all those who want to do business with it. As long as those seeking profits from being primary dealers exist, those who have a vested interest in seeing the current policies continue will be around to contend with in the markets. To be successful as a long term investor, you have to recognize the fact and then use that to your advantage. History is not on their side but short term, the size of their trading accounts is. Use their actions in the market during which they push and strive against reality to look for opportunities. Technicals win in the short run but fundamental realities always win in the long run – always.
Crude oil after putting in several closes above the $91 level, got whacked pretty hard during today’s commodity rout and thus far has not been able to pick itself off of the carpet. Let’s watch that, and copper, to see if market sentiment moves around to viewing some of today’s selling as overdone. If so, we will see buying coming in sometime tomorrow, perhaps right after the margin related selling is conducted.
Bonds are unchanged as I pen this but have been trading higher most of the day. If the Fed ever stops buying in there, the support levels will not hold but for now they have succeeded in having the shorts second guessing themselves.
The HUI needs to close through the 580 level to generate some new upside excitement. It looks like it has enough momentum to move down towards 540 and possibly 530 before we get some stronger buying. A push back through today’s session high near 561 within the next two days should shove it into a trading range pattern.
Click chart to enlarge today’s hourly action in Gold in PDF format with commentary from Trader Dan Norcini
I notified you yesterday that the federal debt level has now surpassed 14 trillion dollars and thus the total debt to GDP is approximately 100%. This is where the bricks start tumbling down:
U.S. NATIONAL DEBT CLOCK
The Outstanding Public Debt as of 05 Jan 2011 at 04:08:28 AM GMT is:
 |
The estimated population of the United States is 309,787,978
so each citizen's share of this debt is $45,202.48.
The National Debt has continued to increase an average ofso each citizen's share of this debt is $45,202.48.
$4.18 billion per day since September 28, 2007!
Concerned? Then tell Congress and the White House!
.
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/gold/t24_au_en_usoz_2.gif)
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/silver/t24_ag_en_usoz_2.gif)
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