Gold plunges as "everything is fine" but short term cycle low due by Bill Downey

Jan 29 2015

The massive deflationary trend that leads to a liquidity squeeze that we have warned about since 2012 continue to escalate.

It Will Now Cost You 0.5% To Save Money In Denmark: Danish Central Bank Cuts Rates For Third Time In Two Weeks
Submitted by Tyler Durden on 01/29/2015

When the Danish Central Bank cut rates precisely a week ago, going from NIRP to NIRPer, and pushing the deposit rate from -0.2% to -0.35%, the sense of desperation was already in the air: after all this was already the second rate cut by the Denmark's monetary authority in one week, all in the hope of preserving the peg to the DEK to the EUR. That sense of desperation just hit a fever pitch moments ago, when the Dutch central bank just went NIRPest, and cut rates across the board yet again, and made it even more costly to save money in the north European country, where the Deposit rate has just been cut from -0.35% to -0.5%!

Pending Home Sales See 2nd Biggest MoM Plunge Since May 2010
Submitted by Tyler Durden on 01/29/2015

The 3.7% plunge MoM in December's pending home sales is the 2nd largest since May 2010, drastically missing expectations of a 0.5% rise in sales (buoyed by exuberance from homebuilders). All regions saw weakness but the Northeast was worst with a 7.5% MoM plunge (so weather will be blamed we are sure - though it appears analysts never thought of that). Inventories fell for the first time in 16 months but NAR's chief economist proclaims it is time for "current homeowners to realize their equity gains and trade-up." Yep - more leverage...

Germany Is Officially Back In Deflation: Stocks Slide
Submitted by Tyler Durden on 01/29/2015

For the first time since October 2009, Germany saw Consumer Price Inflation fall in January. Missing expectations for the 2nd month, Germany's deflationary 0.5% drop in CPI is the worst deflation since July 2009 and comes just 3 weeks after Europe broadly entered the dreaded deflation spiral of doom so many status quo economists are terrified of. Just a good job Draghi unleashed Q€ ... oh wait inflation expectations have tumbled since then too...

2015 Currency Wars Year-To-Date Summary: 13 Rate Cuts, 5 Rate Hikes
Submitted by Tyler Durden on 01/29/2015

For those keeping track of currency wars around the globe, 2015 - a year in which two central banks, those of Switzerland and Singapore have already admitted defeat, is shaping up as nothing short of historic. As DB's summarizes: just about 31 countries have, in less than a month, eased in the form of 13 mostly "surprise" rate cuts, while just 5 have tightened monetary policy.

Crude Crumbles To Fresh Lows: $43 Handle
Submitted by Tyler Durden on 01/29/2015

Yet again this morning's "bounce" to $45 was heralded as maybe possibly could be the stability that markets are looking for. And once again it was not as WTI makes fresh cycle lows to a $43 handle and once again, energy stocks plunged back to energy credit's reality...

(Thanks to www.zerohedge.com for above articles.)

Gold Chart

Yesterday we discussed the convergence of the moving averages and price at the lower blue dotted momentum line that suggested the next move was about to begin either towards 1322 or 1255. The winner is 1255.

Gold has reached the 1st target area for this week (1266-1272). But as you can see on the chart the momentum channel broke this morning and gold has tanked to the overall most likely price point target area which includes our 2nd price target 1243-1255. If we can’t get back above the 1272 area and make it support, then the potential to move to 1243-1255 can still develop.
Resistance is 1275-1282 for the remainder of the day and then 1288. Support is 1253-1257 and then 1238-1243. As discussed on last night’s website the moving average crossover moved the short term trend to from bullish to neutral/bearish and favored one more push down. The ideal zone continues to be 1243-1255 for a price low and potentially near 1266 (give or take a few dollars). If gold is moving higher into mid February, the first thing it must do is close above 1272 and then moving averages. The lower blue momentum channel line now becomes weekly resistance.

Cycles
The window for a cycle low begins on today’s close and will last until mid next week. The ideal day is Feb 3rd (plus or minus 72 hours). Once this pullback is complete, a bounce to mid February is favored. The 200 day moving averages is at 1255, along with the trend line. Keep that area in mind. Unlike the hourly chart above, the daily chart has lower projections beyond 1243. They extend down to 1217-1222 and that should be considered monthly support. If we lose 1243-1255, the expectation would have to move to this lower band of support. WATCH 1255 as it’s the 200 day !!!

Silver
Silver has also broken down and price has pulled back to the December high near 17.25. Its possible to hold here, but the 1680 area is the next big support point at that lower red channel line. If we can’t hold there, then look for a test of the lower line. You can see the big drop once the green moving average let go.

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