Gold short term cycles due to bottom by Bill Downey

Ah the many ways to spin the data. Its true when they say, perspective is everything.

Gold rises after slide, eyes best month in nearly a year - Reuters
Gold firms after slide, eyes worst week since November - Reuters
Gold Climbs From Lowest Level in Two Weeks, Paring Weekly Drop - Bloomberg
Gold falls more than 2 pct to two-week low on Fed outlook - Reuters
Gold posts biggest drop in 13 months - MarketWatch

Gold and silver both fell yesterday. Gold dropped 2.13% or $27.30, closing at $1,257.60/oz. Silver fell 5.78% or $1.04 and closed at $16.95/oz.

The Greek stock market is down 36% year to date; the risk of global contagion in the event of a Greek exit is very real. Ordinarily such a crisis would require a massive coordinated effort from global stakeholders, perhaps directed by the IMF or some other pan-national financial body. But not in this case; the rhetoric is nationally-based and biased without unity of purpose across finance ministries. Recent official soundings from the UK and German governments saying that exposure to Greece is limited only underscores the depth of denial, ignorance and lack of consensus that exists within the euro area. A Greek exit from the euro would profoundly weaken the euro experiment and create a dangerous precedent for all future crises in the region.

We are witnesses to an epic failure of planning, statecraft and social justice. Regardless of where your politics lie, these elements are critical for a modern globally connected economy to function.

Concerns about bank holidays and also a return to the drachma have returned and Greeks are looking for ways to prevent further destruction of their wealth.

Greek elections have dealt a serious blow to the confidence behind the Euro. The press has been touting the “official” position put out by Brussels to stay in their good graces. But this policy has resulted in serious misconceptions and misleading the institutions who buy bonds over the cliff much as Japan did to its economy. These bondholders are starting to get worried. What happens if the Euro collapses?

Many are just starting to comprehend this could lead to a whole other level of the crisis we have been discussing as a liquidity squeeze.

The results of the BundesBank’s Bond auction are out and it was a complete disaster. The possibility of poor results and another technical failure is just starting to sink in. The results really were over the top.

The BundesBank took up a stunning 53.1% of the offer making this the most for any German auction going back to the beginning of the Euro. The total bids were only EUR1.2 bn with an average yield of 1.07%, which was by far a record low, down from 1.77% in October last year.

ZeroHedge News:

Greeks Turn to Gold on Bank Bail-in and Drachma Risks
Submitted by Tyler Durden on 01/30/2015 -

As Eurogroup chief Jeroen Dijsselbloem (of "template" foot in mouth infamy) heads to Athens for talks today, Bloomberg reports the new Greek Finance Minister Yanis Varoufakis has a clear message for his European overlords of the past: “We don’t want the 7 billion euros...We want to sit down and rethink the whole program." While this exposes the nation's banking system to further runs, yesterday's revelation that Russia could step in with financing should they need it, leaves Dijsselbloem and Shulz with less and less leverage even as Spain's chief economic advisor warns, if Greece doesn't play along, "there will be problems on all fronts."

Q4 Annualized GDP Misses, Tumbles To 2.6% From 5.0%; Surging Personal Consumption Pulled Forward From 2015
Submitted by Tyler Durden on 01/30/2015

Following last quarter's upward revised 5.0% GDP, driven higher mostly as a result of even more mandatory Obamacare taxation, Q4 GDP had nowhere else to go but down, the only question was how much. Wall Street estimated 3.0%. Moments ago we got the first estimate for Q4 GDP and it was a miss, printing at 2.6%, and nearly 50% below the Q3 annualized number. This also means that the final 2014 GDP is 2.4%, higher than the 2.2% in 2013 as well as the 2.3% in 2012.

Eurozone Deflation Ties Post-Lehman Record, Worse Than Expected Submitted by Tyler Durden on 01/30/2015

With every central bank scrambling to export deflation, and with the Saudis doing everything in their power to definancialize crude as an investment asset and destroy the US shale patch, it is probably no surprise that the ECB is utterly hopeless to prevent Europe from sliding into an all out deflationary contraction, which this morning Eurostat confirmed when it reported that in January, Euro Area deflation was "worse" (assuming it is worse when consumers pay less for goods and services, which it only is if they are sinking in debt) than the -0.5% expected reading, instead sliding from -0.2% in December to -0.6% in January, which also happens to be tied for the worst deflationary print in the Euroarea history, matching the number from July 2009 when the world was reeling in the global Great Financial Crisis depression.

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

Gold Chart
After losing the 1st target low of the week (1266-1272) when gold fell out of the steep momentum channel, Gold reached the 2nd target level for a low this week (1243-1255) coming in at 1252.

Resistance on the chart is 1272-1277 and 1286-1292. This is the LAST TRADE DAY OF THE MONTH and it remains crucial to stay above 1255 on the close. More important is a close above 1272 today will take the medium term trend (not shown) out of bearish mode for the first time since 2013 and put us at NEUTRAL. Neutral is not bullish, but it’s better than bearish. In 2014, gold failed to close above the key price averages we look at 5 times! So tonight’s close is important. But te real key to sustaining another leg up in gold is closing above the downtrend channel formed this week and then above 1307. If we can do that, our forecast for higher prices into Mid February will remain viable. Support is 1243-1255 and resistance 1272-1277.

Cycles
It’s show time as the cycle window for a turn opened 12 hours ago and will remain open until Wednesday of next week. Odds favor that gold makes a low and rallies into February during this time. Keep in mind that the cycle usually inverts and fails 2 to 3 times a year. That’s the odds, as there are no absolutes. Key will be a close today above 1272. We need that to favor the upside still has strength. As long as we hold 1243-1255 into next week, the odds will still favor gold can rally. Montlhly support is 1217-1222 at the moment. In summary, odds are 75% that gold makes a low between today and Wednesday of next week and moves higher.

Silver
Resistance today in silver is 1725-1750 at the yellow line. Additional is 1850-1900 and 2050. Support is 1670-1680 and then 1625-1640. Like gold, a short term cycle low is due between today and next Wednesday and favors higher to mid month February. First test is that yellow zone. We need to take out that area. Any close below 1609 puts the situation questionable as to higher in February.

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