1.Staring all day long at the supposed super top head and shoulders pattern in place on the HUI
index is a good way to create fear, but I doubt it will create any lasting wealth.It certainly wont build any gold mines.
2.Markets are ruled by
fundamentals, not charts.The largest institutional
liquidity flows occur when key fundamental reports are released.
3.Fundamentally, gold stock
investors need to focus on the history of quantitative easing.
4.As the year 1933 began, the great
depression was reaching its point of maximum intensity. To view that intensity,
unemployment was approaching 25% then, the central bank of the United States
was growing increasingly reluctant (much like the situation today) to
accelerate quantitative easing, despite pressure from the US government.
6.In a 1933 nutshell, the bank wanted
to print less money, and the US government wanted more.
7.By November of 1933, a frustrated
central bank brought quantitative easing to a complete halt.How
did the US government respond to that?
8.The answer is that just two months later, on January
30, 1934, it passed the Gold Reserve Act.The US government revalued gold
about 70% higher, and then continued purchasing it aggressively at that
price, using printed money.
9.The QE baton was
thereby passed from the government T-bond runner, to
10.In the mainstream media, a similar halt to
quantitative easing is being widely discussed now. You should probably view
quantitative easing, targeted at corporate & government debt instruments,
as the ultimate central bank conventional weapon.
11.In contrast, gold revaluation
and money printing are the nuclear weapons arsenal held by government
12.In a showdown between central banks and
governments, governments win.They won in the 1930s depression, and they will win
in this super-crisis.
13.The days of Ben Bernanke demanding that
President Obama get
financial house in order
before he ramps up QE more, are coming to a quick ending.The
only question is, will it be a painful ending for Chairman Bernanke?
14.His counterpart in Japan, Governor Masaaki
Shirakawa, learned the power of government, the
hard way.He resigns on March 19.Shinzo Abe
essentially slapped the Governors face publicly, and is now demanding performance from the Bank of Japan.
15.The bank is now claiming its not sure what new
measures it could take, to expand the balance sheet.I
assure you that Shinzo Abe is fully aware of the
power he has, to order the Bank of Japan to begin significant purchases of
gold with printed money.
16.Gold is going higher, much higher. Its
going higher because government treasury departments are moving away from
quantitative easing involving bonds, and towards QE involving gold. The gold
bears will be destroyed, and everything they made you afraid of will seem
ridiculous, in hindsight.There will be no currency
war, but there will be co-ordinated devaluation of all G20 currencies against
gold, just like there was in the 1930s.
17.Gold wont be confiscated in this
crisis, for two reasons.First, the average person doesnt
own any gold, so theres nothing to confiscate.Second,
the crisis hasnt
produced the kind of breadlines that occurred in the 1930s, because OTC
derivatives were marked to model in October of 2008.If they were marked to
market, the system would soon close down, and massive breadlines would form
18.I consider the idea that the gold bull
market is over to be beyond
ridiculous.I would argue
that for all practical government intents and purposes, its barely started.
19.Ben Bernanke will soon have a hard
decision to make.He can either accelerate QE, or he
can pout in a corner, while President Obama dons a
gold revaluation mask.Ben just watched Shinzo Abe dispose of Masaaki Shirakawa,
like a child disposes of a broken tinker toy.Ben
also knows what President Roosevelt did in the great depression, when the
central bank played tough
with government.He knows his history very well.
20.Ben Bernanke is pushing his luck with
President Barack the
O Man Obama,
ultra-important Fed minutes report is going to tell you whether he has pushed
just a little too hard, or if hes ready to follow the orders of the President of the
21.I would argue that Chairman Bernanke is
pushing President Obama deliberately, because he wants the Treasury to take
QE to the next level, but he cant say so publicly.
here now.You are
looking at the daily chart of the T-bond.Note the
beautiful bullish wedge that continues to form.My
unique 14,7,7 Stochastics oscillator is rising nicely.The action of the bond suggests that Chairman
Bernanke will not confront President Obama tomorrow. If bonds move higher, gold
is very likely to follow.
23.Silver fans can click
should key off the gold chart for buy & sell signals, but there is no
question that the 14,7,7 Stochastics oscillator
suggests silver is poised to begin a nice move higher.
here now.Thats the daily gold chart.
After about 3 weeks of descending, my Stochastics
oscillator has reached oversold status.Oscillator
enthusiasts can buy some gold and related items in the vicinity of HSR
(horizontal support & resistance) at the round number of $1600.The
immediate target zone is $1625, but Im looking for gold to
rally $75 higher before the Stochastics becomes overbought.There are probably two more cycles of the
oscillator required, going from oversold to overbought and back again, before
gold charges at $1800, and successfully breaks into what I call
the green zone!
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