Tuesday, September 28, 2010

Gold $1300 Plus!


25 Nations Devalue their Currencies, RACE TO THE BOTTOM!

Within the last week, 25 Nations Devalued their currencies, through massive quantitative easing. This is talked about by the media only slightly. You need to do your own research, remember QE is a form of shadow taxation, so you should be interested as it affects us all.

Here is a quote from Ben Davies today, CEO of Hinde capital out of London:

“Within a single week 25 nations have deliberately slashed the values of their currencies. Nothing quite comparable with this has ever happened before in the history of the world. This world monetary earthquake will carry many lessons.”

Tuesday, September 14, 2010

Dear Friends,

Today is a case of being careful what you wish for – the Fed has pulled out all the stops in an attempt to avoid a deflationary trap tied to the inception of the credit crisis that broke loose in the summer of 2008. Since then they have flooded the system with liquidity through a process dubiously referred to as Quantitative Easing. They have also loaded their balance sheet with worthless loan paper and shoved interest rates practically to zero.

Not to be outdone, our illustrious administration has saddled us with enough debt at the federal level to last three generations all in the name of “stimulus”.

The result – they have gotten their wish – sadly for all of us, who actually have to live with their damn stupidity, they have let slip the dogs of inflation who have bared their fangs and are now ravenously devouring the hopes and dreams of the middle class in this nation.

The funny money has made its way into the commodity sector driving food prices to unseemly high levels once again just as what happened in 2008. Corn is now within spitting distance of $5.00, wheat is more than $7.00, soybeans are over $10, sugar is over $0.24/pound, cotton is closing in on $1.00, coffee is up near $2.00 pound wholesale ( a 13 year high), cattle are just shy of $1.00/pound, bellies are trading over $1.50/pound for fresh product. In short, the consumer is on the verge of watching his or her’s disposal income decimated by high food prices at the very time that a record number of Americans are on food stamps and are either unemployed or underemployed.

I shudder to say it but based on what I can see of the price action across the commodity sector today, an evil has now been loosed upon the land that portends the eventual ruin of the middle class.

The only bit of saving grace is that energy prices have not YET begun moving up alongside the rest of the commodity complex. I think it is only a matter of time however before the crude complex gets involved. When it does, home heating bills, home cooling bills, industrial energy costs and gasoline prices will join the list of soaring costs nationwide.

The one-two knockout punch of higher soaring food cost and higher energy costs will finish off the consumer whose wages have been stagnant for longer than I can now remember.

Make no mistake about what you seeing, especially with the price action of gold and silver. Both metals are signifying a loss of confidence in the Dollar and particularly in its management team. It is ironic is it not, that any supposedly friendly economic news now results in waves of Dollar selling whereupon in times not that far past, any negative news yielded a huge inflow into the Dollar as a safe haven. Good news – Dollar goes down; Bad news – Dollar goes up.

Now to the technical picture in gold –

Fund buying came in such torrents that it overcame the bullion bank wall of offers near and just above $1,260. As those crumbled, opportunistic shorts that like to piggyback the banks were forced to cover. Their buying engendered more fresh buying allowing gold to not only take out $12,65 but run past $1,275 setting a new lifetime high in the process.

Open interest is at a relatively low level even with this breakout meaning that this rally has legs.

We are now in uncharted territory for gold so resistance levels are being projected by other means of former peaks. It appears that we should see some efforts to stall the rise near $1,282 – $1,285. Failure there and gold will be at $1,300 before one can blink.

Silver took out critical resistance at $20.50 total but just missed closing above that level. Once it does so, it is off to $21. A push through $21.50 and it should move up towards $23.

The HUI is finally moving up showing very good strength here near midday as it has bested stubborn resistance near the very tough 500 level, a level which I might add has kept it in check for more than a year now. If it can CLOSE above 500, it is poised to make a run at the all time high just shy of 520. If it can push through that level, the longsuffering gold and silver share owners are going to finally see their patience rewarded with an acceleration the long term uptrend in the cards.

The Dollar crashed through what should have been a floor of support near the 82 level as if the boards were made of rotten, termite-infested timbers. It is now headed to 80, where if it fails, the ill winds of inflation blowing through the economy are only going to intensify.

Wednesday, September 8, 2010

Strapping In For The Big Move

Dear CIGAs,

Now that expectations for Gold at very significant prices are being offered by various rational sources, there is one thing you can be sure of. That one thing is $1650.

I am getting many emails asking how it is possible for the gold price to reach $1650 by early January.

I suspect these are far out in time, out of the money call option buyers that have done exactly what I have warned against. That is the using of options with an investment outlook.

Options are speculations that you never hold past the half way to expiry point, but instead switch to further out months if you believe in what you are doing.

Those that pre-offer gold cannot trade it at $1650 in January because of the short time versus the big moves. They clearly have never experienced the gold run in late 1979 and early 1980.

I will stand with what I have said for nearly 10 years. Gold will trade at $1650 on or before January 14th, 2011. That never made me want to buy expensive in time call options.

It has given me the courage to invest in gold without margin both in shares and bullion.

There is no doubt in my mind that $1650 will occur in early 2011. I have told you that Martin Armstrong, a master timer, feels that gold will trade higher and face a reaction in middle to late June of 2011.

The gold banks are throwing blocks to the price as we approach $1262. This is a major waste of time and money as gold is going to and through that price. The only argument is whether gold will hit $1650 in January 2011 or $3000-$5000 in June 2011.

Do you have any idea how much money has been made by those that bought gold modestly and in cash only on every reaction and sold into the rhino horns? It sounded stupid when I suggested this tactic for the wannabe traders.

I ran 22,000 long gold contracts in the New York and London markets in 1978 to 1980. Back then that was a big number. Today if I have a conviction, I simply play with everything I have and screw credit. The only credit I would use as a pro trader is options.

Those of you who follow me closely know that I am NOT kidding. This is the time when PRICE and TIME meet each other.

This is the time now as it was in 1979 that I went throttle to floor.

This is the time now as it was in 1979 that I am committing 100% of all the cash I can accumulate to what I believe in.

This is the time when all I have planned for is falling into place for the final and enormous pay day. However, I will not and you should not violate discipline, as I have always tried to teach you.

Option are never held past 50% of time left when you purchased them.

If I am wrong about gold at $1650 on or before 14/01/11 it only means gold will trade much higher than $1650 five months later.

As far as being long and wrong, that is something I definitely am not.