Death of the Gold Bull? Nah, He's Hiding with Tiger

by John Galt

December 8, 2009

Remember this thread:

Be Leery of this Parabolic Move in Gold

Yeah, that one. I got a lot of grief email on it but let’s be honest, the charts don’t always lie and history says that their is a concerted interest of the central banks of the world to suppress the price of gold for many reasons, most important of which is to price it at a point so low that it is not worth one of the emerging nations to buy it and convert their currency to some sort of gold or commodity standard even on a partial basis. Unfortunately for the old fogeys (BoE, JCB, Fed, ECB, etc.) the world no longer views gold in the same manner that it was in the post World War II Bretton Woods period. The interesting thing about this move down in gold is that for the old timers, we’ve seen this movie before and without ruining the ending, let’s review the first chart one more time:

Gold12_2parbolicjgfla

That’s the same chart from the original article and guess what? Nothing has changed. The support area is the same. The move the same. The lies from the media the same. The “gold is dead you had better buy all those stocks the insiders are selling” from CNBC is the same. The Bubbleconomists all proclaiming that the U.S. Economy is recovering is the same. Now that we have established all of that, let’s go find out why the gold bull went into hiding with Tiger Woods over in the Orlando Area and hope that his help has a nice silver shovel to scrape up the bull’s er, uh, mess. Or Tiger’s mess. Whichever smells worse and is bigger.

First, let’s clear the air about the historical comparisons. I do not think we are in the blow-off phases of 79-82. In fact, here is what many of the “experts” on the Bubblenetworks are trying to proclaim:

Goldhistorical1jpgjglfa1

I heartily disagree. In fact I had to blow the chart up, shrink it down and show you, my fellow cohorts who prefer real money and honest (snicker) banksters to run their nation. Here is what I think and why it is important:

Goldhistorical1jpgjglfa2

Exactly. I think we are at the down leg of the first 1973 post-Nixonian blunder decision to inflate and then wonder why price controls did not work. I honestly believe that the markets are going to fluctuate not for years, but maybe a month or two but hold the higher support levels around 1020-1080. The one month chart reflects the first fill of the gaps appears to be underway in conjunction with the U.S. dollar rally:

GOLD1MOcstickjgfla

The GLD ETF is a good proxy for the current move and gives you some perspective as to what the big money is thinking and right now that “big money” happens to wear swimming pool towels from foreclosed hotels and ride camels praying to the east for the ChiComs to bail their butts out and buy their little kindom in Dubai. As this liquidation of their over valued properties continues they are desperate to raise cash and the long term prospects for that Emirate are not good. Thus you will see even more dollar and gold related action as they sell anything that is not nailed down.

(Pssst, buddy, want to buy one of my 19 wives? Maybe I’ll give you a 3 for 1 deal?)

Since some have asked me, silver is in a similar situation and I think we will test support by filling the gap in on the SLV and hold at about the same time the second or third gap on GLD fills.

SLV6MOcstickjgfla

Once this fills you may don your spacesuit, your g-suit (That’s suit, not spot Tiger) and get ready for a liftoff that should send silver up into the $40-$80 range in very short order. With just my back of the napkin calculations, if and when (more like when) gold pierces $1800 silver should be trading in excess of $80 easily as it plays catch up after all these years and foreign central banks move in on the market demanding physical delivery causing “issues” for some of our favorite institutions. Oh, and one hell of a short squeeze, which makes one wonder if Tiger dated any porno star midgets also…hmmmm.

Finally, let’s look at the big picture one more time for some perspective:

40yeargoldjgflaigolder

The chart says it all and instead of years to achieve the next and probably final parabolic move before we dump our dollar or change the exchange rate policies to accommodate a new reserve currency, this could happen in less than 24 months easily the way this group of clowns are managing our banking system and economy.

If you think the “big money” has any faith in the economy, here is your 2 year weekly chart of the 3 month T-Bill yield:

UST3MY2yrjgfla

Thus why I think the January to March 2010 window of doom could well be opened. The markets could be clubbed like a PGA golfer who pissed off his Swedish wife who is apparently experienced using long irons and whacking someone allegedly with a three iron. If you don’t believe me, look at today’s 28 day (1 Month) T-Bill auction results and the yield from it today which had HUGE demand with a Bid-To-Cover of 5.33:

28dayBILLAUCTIONRESULTS12_8jgfla

I’m with the gold bull. Tiger, do you have room for one more in that now big empty mansion? I won’t drink all your beer nor beg to read all your old text messages. I just want a place to hide out until this storm passes over.

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9 Comments

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9 responses to “Death of the Gold Bull? Nah, He's Hiding with Tiger

  1. Davidus Romanus

    Did I see those last figures correctly? They tendered (tried to sell) 154 Billion in bonds and only 28 billion were purchased? Something seem out of whack there. Am I missing something?

    • Administrator

      Other way around. The sale was for $28 billion and $157 billion in bids were submitted. Everyone is trying to park in safety now which means some bad things are about to happen.

  2. KEIKO

    Nice shot!!

    oooh, I can sleep well from tonight.

  3. Hey, like your site a lot. I’m gonna have to disagree with your “gap” analysis of GLD and SLV. I thought about this after examining the daily gold and silver futures charts. The gaps in GLD do not show up on those charts because futures essentially trade 23 hours/day.

    Gold/paper gold drives the price of GLD, not the other way around. There is a smallish gap around the 1120 area on gold that **might*** get filled.

    My downside scenario for this pullback is, at the most extreme, $1100 on gold and maybe $17 on silver. My caveat is that silver technically is set up to start moving back up in quite bullish fashion.

    Dave in Denver

    • Administrator

      Paper drives physical, not the other way around unless you’re in Dubai, Beijing or Mumbai. The paper is the pusher right now. When that disconnect occurs the dollar is effectively dead.

  4. Tim

    Boy, did you call this perfectly, John. I had been mulling over what sort of pullback we might get and made a comment here asking for more clarification of your case, but between you and the readers I was convinced. I chose to sell and wait for the pullback, and it saved me ALOT of money.

    I am starting to think you are a stone cold genius.

  5. Davidus Romanus

    Thanks for clearing that up. I guess we still have a way to go before people stop lending money to the US Gov’t.

  6. PositionSizing

    Gap analysis on an SLV chart???

    Commodity ETFs are only traded 6.5 hours a day. Commodities are traded nearly 24 hours a day somewhere.

    Bottom line, of course the SLV chart has a bunch of gaps. Therefore, traditional gap analysis goes out the window.

    The SLV gap at $15.20-$15.50 proves nothing.

  7. I trade both paper and physical everyday. Right now physical is taking control of the market….watch and learn