Here at Screwtape Files, we had a great discussion last week about whether the gold price would go below the three year trend line, and accordingly whether a sell-off would occur based on TA principles*. I’ve been watching the rise over the last few days with great interest to see whether the price will be ‘managed’ back up – a leading theory is that a high(er) price is needed to coax physical out of the market.
I find interesting the number of gold-friendly articles which have popped up recently. Like this one on Zero Hedge, or possibly this peice from the Spellman report. Now whether or not a gold standard is possible or not is irrelevant**, I'm more interested that the whole ‘gold standard’ idea seems to have had a recent ‘flush’ into the public consciousness. I wonder if one is not a consequence of the other – in other words if part of the gold price management is to do with media manipulation. Unfortunately, I don’t have any hard research on that idea, nor do I have the millions of dollars necessary to fund a study on it. That upsets me (the fact I don’t have a million dollars), but I do have a few anecdotal items which I want to present.
This is not some hair brained scheme involving scamming people using "Cash for gold" scams, grave robbing or anything sinister.
This information is given freely and can be linked to. We will object to anyone copying this information and reposting it as their own work.
This is my nice way of saying I will sue your ass if you copy and post this elsewhere :)
You do this at your own risk to your health and all these experiments should be done out doors and away from children and animals as we are dealing with toxic chemicals and materials. In short if you are impatient, ADHD or have an IQ less than 100 please stop reading now.
The courts in Iceland will rule today whether Geir Haarde (former Icelandic Prime Minister)
was grossly negligent in the financial crisis. If he goes down expect a lot of others to follow. Hang 'em high or shoot on sight would be my recommendation. Reuters has a few scribbles on this if you want to know more.
I'm proud to announce another fantastic opportunity for Screwtape readers today. James Turk, the spokesman of GoldMoney, seems to be the go-to person for commentary on the future of the gold market. In particular, he is known for his forensic interpretations of charts, in which he bravely and with great integrity puts to one side his own business interest of selling physical gold in order to objectively make the case that readers and listeners should buy physical gold.
So, in order that our readers may learn to profit more fully from Turk's incisive technical analysis, I will set out here some of the basic techniques that he uses, with a view to showing how trade-able conclusions can be reached that will ultimately lead to enormous gains in your personal wealth.
Today I take a bit of a departure from the normal anguish over precious metals, but I hope you'll see at least some relevance in this post to much of what goes on in the silverogosphere on a daily basis.
Silver bugs on-line (and some of their yellow metal cousins) often seem to fantasise about waking up one morning and finding that their investment has jumped in such an extraordinary way that they're suddenly rich. Early retirement beckons, two fingers (or one, if you're from the wrong side of the Pond) are raised to bosses, and a Ferrari catalogue is casually ordered. Or an extra-nice hat is window-shopped, if you're me. I have to admit that I lead quite a simple life, what with being locked in GM's basement and all...
Anyway, the extraordinary thing is that exactly that happened to me yesterday. I hadn't ever imagined it would transpire, but it did. Do you want to know what a chart of your favourite silver fantasy looks like? Because I've got one right here for you:
Gather round, goldbugs, wherever you roam, and admit that the waters around you have grown, and accept what my charts to me have made known, that a new trend is soon in the making.
The gold weekly chart closed last week again beneath the grey dotted line. That line, with the trend lines above it, had captured all of the weekly closing points since 2008. That suggested a sharp downturn ahead, but I admit today's quick bounce up back to $1650 surprised me. I noticed that the center trend channel (purple) is *exactly* 10% from bottom to top, and that, remarkably, the black trend line above it is also exactly 10% higher from the purple channel. So I drew an additional trend line (black) the same distance to the bottom of the purple channel, and it looks to me like the final line of support if gold is to avoid a sharp drop to the $1500's. I generally don't short gold, but if that line, at $1620, is broken, I probably will.
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Many kind readers have inquired as to my whereabouts over the past several weeks. Unfortunately, I can't divulge too much sensitive information therein. Suffice it to say, however, that James Turk has called my recent activity "super bullish for gold."
I support ‘Stacking Phyzz’, because the principle, largely works. It demonstrates that you’re a saver, operating a surplus and choosing to save that excess in a hard asset, rather than bank credit. Good. Someone with a productive, industrious nature, adding value to society. Taking charge of your savings is a pragmatic thing to do, especially since banker-based debt is just really another way the government can take charge of your savings for you and consume it, as a matter of policy.
Well, that's it. It's official. The gold bull is over. Dennis Gartman said so, so it must be true, given his outstanding track record. And Jon Nadler agrees, so it's as good as in the bag. Even the perma-bullish blogosphere is full of doom and gloom.
I'd agree that things feel pretty bad. Gold has made a series of lower highs since it hit $1900 back in September, and silver is still suffering from its broken parabola of 2 May. It's not surprising therefore that last week's plunge on the back of disappointment that the FOMC minutes didn't endorse new quantitative easing measures (i.e. 'QE III') has rendered an already bearish community almost without hope.
But do the charts support the thesis that gold's bull run is over? Are we sitting on the precipice awaiting carnage, with our already red positions about to go scarlet? Or are the charts telling us that nothing unusual has happened, and that all is calm. Let's take a look, and - for fun - let's keep score on the Carnage vs Calm points...
The big story of last week was the circulation on the web of photos purporting to be of 'salted' (i.e. tungsten-filled) gold, which was picked up by at least two-dozen websites with an interest in the PMs.
Screwtape questioned at the time the provenance of this story, and we also had concerns about the photos. We still have our doubts for this particular case. However, in an astonishing new development the Screwtape Files has come into possession of a new set of photographs of a different gold bar which has been pretty much incontrovertibly salted. The pictures are, as far as we can ascertain, entirely genuine and they came to us from a highly respected and well-placed source.
[IMPORTANT: To our knowledge, we are the first website to publish these pictures. Any reproduction of these pictures on other sites must be with the permission of the Screwtape Files, and must link back to this article.]
We cannot disclose our source, but the 1 kg bar was intercepted by police in Algeria, following the flight of gold from Libya after the NATO intervention last year. It was sent to Paris for expert analysis, and it is the results of this analysis that we are about to show you now. What you will see is at once shocking in its brazenness, and humbling in its ambition to defraud on a massive scale. We are told that there may be many hundreds of similar bars from the same shipment that were similarly salted.
[UPDATE: THE GOLD VERSION OF THIS POST IS AVAILABLE HERE.]
Yesterday I noted that the markets (PM and non-PM) in March had behaved much like the old English proverb about the weather in that month: "In like a lion and out like a lamb". Gold closed on 1st March at $1725 and silver at $35.50, before they cratered later in the month to $1625 and $31.25, respectively, and then climbed back to close the month at a timid $1668 and $32.28.
Yesterday's post dealt exclusively with gold and its miners, and I concluded that the outlook for both - from a technical analysis standpoint - was very bullish for April. Today I'll take a look at silver. Will the grey metal follow its bigger, yellow sister to cheer up all the silver bugs?
Let's kick off with the daily chart, which, as with gold, is exhibiting quite a fine inverse head and shoulders formation that looks like its due for either confirmation or failure any day now.