Gold and Silver under pressure to start the week by Bill Downey

INTRA-DAY NEWSLETTER ~ Dec 22 2014

As discussed last week, it is important to keep in mind that one nations deflation will be another's inflation as the much tooted currency wars that are in play (ie; Jim Rickards & company) is now entering its acceleration phase. While the majority of the world is now recognizing what we have been saying is coming (deflation), they have yet to acknowledge, regardless of the reason, (fundamental or manipulative) that the US dollar would be the beneficiary.

It's not that we're long term bullish on the dollar, as we are actually long term bears, it's just that the world is massively short US Dollars and it is rare that the majority are allowed to be correct. What usually happens is what is happening in the US stock market, and that is that the shorts are being first wiped out before a real adjustment to economic reality takes place.

While the stock market can certainly be in its final stages of that wipe out, it doesn't seem that even this tremendous dollar rally is yet complete.

So while there is ample evidence of gold manipulation, it is not out of the question that gold has been signaling the same phenom is occurring. Odds favor it's both. There is no doubt that the US dollar is at important resistance but should we take out the 91-92 area, odds favor we're heading for 96-100 on the index if that occurs. And if it does, gold may very well reach 850-1050 before the bear market ends.

One thing is certain. No matter where the extreme low in gold takes place, odds are very high that we have a wave of much higher prices coming once the collapse takes place. Odds are also high that the low should occur in 2015.

Belarus In Full-Blown Hyperinflation Panic: Blocks News, Online Stores; Bans All FX Trading For 2 Years

Submitted by Tyler Durden
Today the Belarus central bank shocked its own population when it also announced full-blown capital controls designed, releasing additional measures to stem the "negative trends of currency and financial markets " including raising mandatory sales of FX revenue to 0%, suspending all OTC FX trading (so pretty much all FX), introducing a 30% fee on all FX purchases, "recommending" that banks halt BYR lending until February, and sending 1-yr interest rates on liquidity operations with banks to a eyewatering 50% in hopes this leads to an increase in BYR deposit rates. It will. What it won't lead to is stabilization in the deposit market as the natives realize they too are next up on the hyperinflation train.

Existing Home Sales Collapse Most Since July 2010, Downtick In Stock Market Blamed
Submitted by Tyler Durden on 12/22/2014

Having exuberantly reached its highest level since September 2013 last month (despite the total collapse in mortgage applications), it appears the ugly reality of the housing market has peeked its head out once again. As prices rose, existing home sales plunged 6.1% - the most since July 2010 (against an expected 1.1% drop) to 4.93mm SAAR (the lowest in 6 months). As usual there is an excuse for this carnage... NAR's Larry Yun blames the stock market (and rising home values). Quite a conundrum for the Fed.

Gold Chart
Gold’s listed support on last night’s website update was 1172-1182 and it remains so throughout today and we have a good chance or reaching inside that range. Additional support is the 1155-1163 area and should be considered weekly support. Odds favor 1163-1172 as most likely support for this week if we take out 1182.

Resistance listed at 1204-1212 also remains in play and today’s high at 1203 spot so far is likely to be the high. Additional resistance now will be at the 1196-1199 area. The short term trend as reported last night remains bearish and it will now take a close above 1207 to neutralize the downtrend. We have remained consistent in expressing our concern that the price pattern look of choppy and overlapping structure is almost always a warning of a weak price structure and is most often associated with a counter-trend move, meaning that the overall trend in gold remains down on a medium term basis. Gold should have strong resistance at 1196-1204 for the remainder of the day. It takes a weekly close above 1222-1225 in order to suggest significant change to the short term outlook.

Cycles
The 1238 high achieved on Dec 8th was within the standard deviation (yellow zone) of the medium term cycle and it is possible that we are now moving into a short term low due Dec 21st (plus or minus 72 hours). Unfortunately, it is not out of the question that the downtrend that started since the 1238 high can continue into the end of the year where the “N” is labeled on the chart. Over the past 6 weeks we had favored a rally into yearend but as you can see the rally has been very weak and below expectations.

The medium term cycle is in its ideal week here (green zone). It is possible for gold to make a low this week and produce a 2nd leg higher into the January/February timeframe. Odds favor that once that leg is complete, another new yearly low will take place sending gold lower. On a short term outlook, that lower red line is support in the 1172-1182 area. A weekly close below 1163-1172 would favor a move down towards 1100. It takes a weekly close above the higher black dotted downtrend line in order to favor a 2nd leg up is underway. Key resistance is the 1255-1272 area. That is the spot we need to get above if gold is to ignite a January/February rally.

Silver
Silver has key resistance at the 1639-1650 area on a weekly basis and then 1725-1738. Additional resistance on Monday is the 1594-1609 area. Support lies at the lower trend lines at 1500-1525 and that is the odds favored price point if we lose support at the current red line that price is testing right now. The short term trend remains bearish and a close above 1639 is needed to neutralize the downtrend. Silver has the same choppy and overlapping price pattern as gold and as such, it has to be favored that the move higher from the lows has been a counter trend move and the overall medium term trend is still down. Odds favor a test of that lower trend line on a break of this current red line support.

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