Submitted by Chris  Capre  of  2ndSkiesForex

Gold Technical Outlook:  Looks Set for Upside Break

Looking at the weekly chart on Gold (vs. USD), the sell-off from two weeks ago at the rejection of $1900 was impressive not so much in how much it dropped in a single week, but on how well it recovered.  The following act in the next week was a solid weekly gain of 3.4% from an opening price of $1822 - 1864 closing towards the highs suggesting buyers were holding into the weekend and thus not taking profits.  The following week was a sell-off but very mild in nature and a third week of price rejecting off the weekly lows.  Three weeks of selling and three weeks of strong rejections off the lows clearly communicating to us anytime the shiny metal is sold off, buyers are eager to come back in.  And each time, they are doing so with more confidence because every time, they are buying at a higher price suggesting they are happy to take any dips as an opportunity to buy (or invest/hold) more gold. 

This clearly communicates the underlying buyers are not afraid of the short term effects CME margin hikes may have on it or their futile (and puerile for that matter) attempts to manipulate something the market clearly wants to have and to hold.  If they were afraid, they'd simply wait for a longer or deeper correction but the elevated buying rejections/levels suggests traders and holders appetite has not been satiated and continues to be part of their desired palette.

As a trader and quantitative technician, this all communicates continued upside pressure and a likely breakout (and close) above the $1900 barrier is coming soon to a market near you.  We feel whoever is attempting to depress the prices (albeit sovereigns or manipulators alike) will soon have to yield the $1900 barrier and a close above it.

It should be noted that Gold (vs. USD) has only closed down on a weekly basis13x  this year out of 37 weeks (35% of the time).  Of those  13x  it closed down, only  5x  (38%) did it close the following week down.  We suspect this week will follow the majority pattern of another up-close on a weekly basis with renewed interest (not like people needed a reason) as a result of the Greek Tragedy (which looks set to bring down the Euro), a Moody's downgrade of France (vis-à-vis  Credit  Agricole  being exposed to €21B+ in Greek Debt) thus adding to the 3,00 reasons people would flock to gold faster than geese flying south after seeing a cold front.

*On a historical note, it does seem ironic that the culture which spawned European and Western civilization seems set to bring it down (at least economically).

We would also like to note the monthly close up/down ratio on a monthly basis has been increasing over the last 7 years from a 50% ratio (2004) to a 75% ratio (2010 and so far for 2011) with the only time the ratio was weakening (2007-2008) where gold only gained 11.4% on the year.  After this, the ratio began tightening and is now at its strongest levels in the last 10 years with no sign of this trend abating anytime soon.   

We suspect either this week or at best by the end of Sept., we will see a weekly close above the $1900 barrier and this technical break of the highs will only encourage traders and holders another upside run is about to begin.  Dips to $1700 should be considered (dare we say) 'golden' opportunities to buy setting short term targets at $1875.

*Authors Note:  The last time we wrote an article here on Zero Hedge, there were many comments on how we wrote an article devoid of macro, fundamental or economic reasons to be involved in Gold.  Shame on us. 

We would like to note this article is simply about providing a technical outlook on what we see happening with the underlying order flow and where trading opportunities are, along with where we see prices going short term.  The strategies one has to employ for trading, investing or holding physical gold are completely different and have unique time horizons.  For the record, we own physical gold, but also trade gold on a short term basis either daily or weekly. 

This article merely attempts to provide a technical perspective on what we see happening in Gold vs. USD over the next few days or weeks and that is all.  There are plenty of articles here commenting about the various reasons to own physical gold and hold for the upside gains which we see clearly over the horizon.  However, for the trading community, a technical perspective is often useful and is the heart of what this article aims for.

Original Source

Eric Sprott - From Here Silver is a 30 Bagger to $1,200   [READ]

Crunch time for G7  (1:29) 

Marc Faber: Gold is “Dirt Cheap”

Marc Faber: Gold is “Dirt Cheap”

Jim Rogers: What's Next for the U.S.? - pt.1

Jim Rogers: Market At New Low As Euro Sells Off - pt.2

Gold on track for biggest weekly loss since June

* Gold tumbles below $1,830/oz after volatile week

* Traders blame liquidation in New York gold  futures

* Coming up: G7 finance ministers' meeting in  France

By Jan Harvey

LONDON, Sept 9 (Reuters) - Gold prices pared losses in choppy trade on Friday but were still on track for their biggest weekly loss since June as some investors cashed in gains after losing confidence in the metal's ability to build on this week's record highs.

Prices fell sharply earlier in the session, dropping $20 an ounce in a single minute. Traders blamed heavy fund liquidation on the New York futures market, where trading volumes jumped by 3,000 lots shortly after 0600 EST.

Gold found little support as it slid below $1,830 an ounce as concerns grew its run-up to record highs may have been overdone. Talk of further central banks sales after Libya said on Thursday it had sold 29 tonnes of gold and the prospect of more margin hikes on Comex futures also unsettled traders.

Spot gold was down 0.6 percent at $1,857.80 an ounce at 1339 GMT, having earlier risen as high as $1,885.50. It was well off its session low of $1,824.44 an ounce, however.

The metal has had a volatile week, trading in a near-$130 range after a swift correction followed Tuesday's record $1,920.30 an ounce.

" People are probably very exposed to gold now, because they've been so bullish, yet the technicals aren't that great now that you've had that double-top pattern coming through," said Macquarie analyst Hayden Atkins.

" There is no real direction provided by other  markets," he added. " I guess this is a sign that people are interested in taking profits at these kinds of prices, in the absence of direction from anywhere else."

Trade is expected to remain volatile ahead of a G7  finance  ministers' meeting this weekend at which officials will come under heavy pressure to take action to revive economic growth.

France has called for a coordinated response from the Group of Seven nations after anxiety over Europe's debt crisis led world stock markets to drop in recent weeks, though differences between the economic problems facing the United States, Britain and  euro zone  states are complicating the task.

Other markets provided little direction to gold. U.S.  stocks  dipped at the open, European shares fell as traders were unimpressed by a $447 billion jobs package unveiled by U.S. President Barack Obama on Thursday, and the dollar rose.

U.S. gold futures GCv1 for December delivery ticked up $3.90 an ounce at $1,861.40.

SCRAP RETURNS TO THE MARKET

There were some signs that high prices were attracting recycled metal back to the market. Japan's largest bullion house, Tanaka Kikinzoku Kogyo, said it recycled a record 1.9 tonnes of gold from jewellery brought in by customers in August alone as prices hit record highs.

Among other precious metals, silver was down ` percent at $41.86 an ounce.

The gold:silver ratio -- the number of silver ounces needed to buy and ounce of gold -- steadied at around 44 after dropping to as low as 31 in April as both metals hit record highs. Buyers are wary of silver after its sharp correction early this year.

" With the deterioration in the economic outlook for both Europe and the U.S., and the recovery in  Japan  appearing to have paused at least temporarily, demand for silver from the global electronics industry appears to be under threat, which may leave the metal vulnerable to potential price underperformance versus gold," said Natixis in a weekly report.

Spot platinum was down 0.9 percent at $1,839.24 an ounce, while spot palladium was down 1.4 percent at $741.72 an ounce.

Platinum is looking increasingly attractive in comparison to gold as prices trade at a discount to the yellow metal. Some traders said this trade was putting pressure on gold.

" Historically gold is about half the price of platinum," said Lars Steffenson, managing director at Ebullio Capital Management. " In the last two, three weeks you've actually seen gold spike to levels where it shouldn't be."

" That obviously has to do with the sheer volume coming into gold, but a lot of the (funds) are looking long term and saying this doesn't make sense. There is an awful lot of gold and platinum is quite tight. Plus you have the whole South African situation, labour relations deteriorating." (Editing by  James Jukwey)

 

  /the greatest wealth is health  

 

Gold values driven by Indian and Chinese inflation, not global recession

NEW YORK (Commodity Online):  Unlike the popular assumption, the current  Gold  rally is not fuelled by the European debt crisis or global slowdown but strong Indian and Chinese demand.

Demand from professional investors has remained mostly unchanged, as shown by holdings in ETF's and futures contracts. Gold holdings in SPDR GLD, the world’s largest gold ETF, has actually declined from 1280 tonnes to 1232 tonnes.

The real demand growth for gold has largely come from consumers in China and India who are buying gold to hedge the high inflation prevalent in their countries, says Clyde Russell, a Reuters market analyst.

India’s  Gold  demand jumped by 38% in Q2, 2011 whereas Chinese demand rose 25%. This coincides with the Indian inflation which has been above 9% for most part of the year and the record-high Chinese inflation of 6.5%.

So, as long as inflation in both countries and threats of a global economic slowdown remain, there is no reason to expect a decline in gold prices.

However, investors should keep an eye on the inflation rates of India and China as any decrease has a huge possibility to cause a slump in gold prices.
Source:  reuters.com

 

 

zerohedge.com 
SEPTEMBER 08, 2011

 

 

From Mike  Krieger  of  KAM  LP

There are two ways to conquer and enslave a nation.  One is by the sword. The other is by debt. 
- John Adams

What lies behind us and what lies before us are tiny matters compared to what lies within us.
- Ralph Waldo Emerson

 

 

The Euro is Finished

To regular readers of my pieces over the last several years this may not seem like a particularly poignant statement.  After all, I have referred to the Euro and the  U.S. dollar both as worthless political toilet paper for years.  The reason I bring it up right now is not to state the obvious long-term macro conclusion that the Euro is a foolish, unnatural creation that only political types twiddling their thumbs in a room could come up with.  No, rather the reason I say it now is because I believe the Sword of Damocles is now hovering right over it.

The only question in my mind at the moment regards the specifics of how it will end.  I would say that the majority of those that think there is a strong likelihood that the euro falls apart envision the  PIIGS  countries leaving or being thrown out.  While I certainly think this is a possibility, especially if Greece just calls it quits and then successfully transitions to its own highly devalued currency since this would for sure start the ball rolling and before long many of the other financially weak nations would also bail.  In such an event, I suppose what is left of the euro could be comprised of stronger Northern European nations and in that case what is left of the common currency could in fact strengthen materially versus other fiat currencies for which no such “restructuring” has occurred.  However, I am not convinced this is what happens.  The reason I am not convinced is because I don’t believe that the desired austerity measures will ever really go into effect in these nations and even if they did it would merely collapse those economies and the problem would not be solved.  As many have stated over and over (including myself) there is no conventional solution to this crisis.  There is far too much debt and there is no way real GDP growth can grow fast enough to counter this.  The debt will be defaulted on via restructuring/default or a dramatic destruction of the purchasing power of fiat currencies.  Nevertheless, the bureaucrats in Europe have such a deep love affair with their preposterous experiment they will turn a blind eye to all the transgressions of the  PIIGS  and continue to just pretend they have solved something with every new bailout scheme.

So that brings us to the other, and I think increasingly likely, outcome.  That is namely that the  ECB  continues to transfer wealth from the prudent and fiscally more sound nations (mainly Germany) to the periphery until the populace of Germany snaps.  I think that moment is very, very close at hand.  Once that tipping point is reached there will be no turning back.  The popular anger at the  ECB  and Euro will be so profound and so long festering that it will overwhelm all attempts to keep things together.  Germany could leave the Euro.  Or it could make it so difficult for the  PIIGS  that they are forced to leave.  Either way, Germany is EVERYTHING.  Nothing else in Europe matters right now besides the sentiment on the German street and it has become pretty clear lately which way that is going.  I am 100% convinced that Germany will play nice until that crucial moment is reached where it really is put up or shut up (we are close).  At that point, I have no doubt that Germany will do what is best for Germany.  In the event that Germany was to leave, the Euro would be gone forever.  It would become pure confetti overnight.  This is not my base case but it could happen.  Anything can happen right now.

The Fourth Turning is Global

All of this discussion about the euro brings me to a broader point.  While for obvious reasons I focus my attention on the United States because this is where I live and what I know best it is imperative for me to clarify my view that this Fourth Turing we are in is global in nature.  Remember, what really characterizes these shifts is the fact that the trends, institutions, political structures and parties, social mores, money systems, etc all die and are reborn during such episodes.  The last to get this of course are the elites and the political class who are always in bed together and seemingly at the height of their collective corruption once the Fourth Turning hits.  We see this everywhere at the moment, from the  U.S. to the  Eurozone  to China.  What makes me laugh more than anything else are all these political hacks and financial “analysts” who keep saying that the answer to the crisis in Europe is a fiscal union in Europe.  That somehow this crisis will lead to the necessary resolve to form a fiscal United States of Europe, or some idiocy like that.  Sorry folks, it’s not going to happen.  This whole “problem, reaction, solution” playbook worked for the elite in the prior era but it will no longer work.  The playbook is out there.  It has been read and studied.  We know the playbook.  It’s not going to work this time. 

Like I have said before, one of the key aspects of the new age we are entering will be a dramatic reversal of a lot of the unrestrained globalization that has occurred since World War II.  Things are going to be more local everywhere.  Such as the food we eat and the products we use.  The lack of any breakthroughs on the energy front as we confront resource constraints demand that this be the case.  This reality will change everything in every possible aspect of life on earth.  Things in general will be much less “top down” on the political front.  There is a “tide in the affairs of men” indeed and that tide will take the Euro and any ideas of a fiscal union out to sea forever.  The key thing for everyone reading this to do is to get prepared for the new world as much as possible before it comes suddenly.  This has always been the idea behind my pleading to buy gold and silver.  We will need new forms of money and exchange.  It cannot and will not be a fiatSDR  or any ridiculousness such as that.  That notion represents the past trends and the already failed dreams of our parents generation of central planners and free lunches.           

Quick Thoughts on the Swiss Franc         

While the move by the  SNB  to basically link its currency to the dying Euro was shocking and will send  shockwaves  throughout the global financial systems for months to come, in many ways it was inevitable.  The central planners are still in control and they are getting increasingly desperate.  Part of their desperation manifests itself in acts to prevent markets from sending out signals to investors and the general population.  This is why Central Bankers print money and buy government bonds.  This is why the  ECB  is buying worthless  PIIGS  debt.  This is why the  SNB  decided to destroy its currency.  After all, if they agree to destroy the value of the Franc at the same pace as the Euro then it will become less clear to the currency market just how quickly purchasing power is being destroyed.  Of course, you can always tell in the commodities sector.  What the Swiss did is unfathomably bullish for commodities, in particular energy, food and precious metals.  Every rich person with a Swiss bank account in Swiss Francs will be scrambling to turn that into the one hard currency left:  GOLD.  That is what the Swiss said to us earlier this week.  They told every investor on the planet “we don’t want to have a hard  currency.”  If you want a hard currency you have once option now.  Gold.  When people really figure this out it is going to be a mad scramble for physical metal the likes of which no one alive has ever seen. 

Peace and wisdom,
Mike

Original Source

 

 

Gold heads for weekly loss after Obama's $447 bln jobs plan

Peter Schiff - “The Whole World is Desperate to Buy Gold”

Gold edges down after Obama's jobs speech

 SINGAPORE, Sept 9 (Reuters) - Gold ticked down on Friday,
having risen 3 percent in the previous session, as investors
digested U.S. President Barack Obama's $447 billion jobs plan to
spur growth and hiring as well as battling unemployment.  	

 FUNDAMENTALS	

 * Spot gold eased 0.36 percent to $1,861.46 an ounce
by 0013 GMT, well below a lifetime high around $1,920 hit this
week. Lingering debt crisis in Europe and volatile currencies
have sent gold prices to a series of record highs this year.	

 * U.S. gold GCcv1 added $5.2 an ounce to $1,862.7 an
ounce.	

 * President Obama laid out a $447-billion jobs package of
tax cuts and government spending on Thursday that will be
critical to his re-election chances but he faces an uphill fight
with Republicans. 	

 * Obama also said on Thursday he would propose a
deficit-reduction plan on Sept. 19 that will cover the cost of
his jobs bill and include " modest adjustments"  to Medicare and
Medicaid and more taxes for the rich and corporations.

 MARKET NEWS	

 * The Nikkei benchmark edged lower on Friday and is expected
to stay in a narrow range as a keenly awaited speech from U.S.
President Barack Obama was almost in line with market
expectations. 	

 The dollar barely reacted to Obama's jobs package in Asia on
Friday, while the euro struggled to make any friends after the
European Central Bank (ECB) seemed in no rush to resume its
tightening policy. 	

   * Crude oil futures fell in choppy trading on Thursday,
following Wall Street lower after the U.S. Federal Reserve Chief
gave a speech that lacked new steps to spur economic growth, and
as the dollar rose sharply. 	

Gold adds 2.1% after Trichet, jobless claims