Fed’s Two Mandates

The Fed has two mandates: 

“maximum employment and stable prices”

What assclown failures they are!  You’d have to be death, dumb, blind & stupid not to realize they have one mandate – protecting their member banks who own them.

Maximum employment:

Wages of said jobs

Value of “our” dollar which aids in stable prices

Prices

But of course I am not a paper trader anymore, so it is the expanded charts that hold my interest. It is clear the breakout is confirmed and is for real. Two closes above the trend line on heavy confirming volume. 1760 has to fall to break the trend of lower highs. Significant resistance is going to come from the 1760 -1800 area. I would like to see a swing high in that resistance zone and then a reaction swing low somewhere above that  down trend line.

The weekly chart shows the long term situation and it looks real good for a move to the middle trend line in the up channel. I like this price level during the next 4 weeks or so. The technical say we have this move and more available. RSI at 55, stochastic at neutral, and MACD climbing into a bullish cross. Buyers of the panic are being handsomely rewarded. I am accumulating cash for the next 10% correction. Just say no to paper, buy the real thing and prepare for Freegold.

The big white candle breaks the long term daily trend line.

Here’s the chart I really like to follow and as a buyer of physical gold. Let the paper players have fun with the daily chart and the whipsaws. An accumulator of physical should simply buy when enough dollars are accumulated for a purchase. If you are a reforming paper trader and still want to play a bit, time your purchases of physical to technically favorable situations on the long term weekly chart. Clearly anytime since the low of 1525 has offered a technically favorable opportunity to buy. RSI is just now coming off of long term support. Stochastic is now neutral and MACD is putting is reversing and setting up a bullish cross. Price is going back up to the top of the trend channel at 1800. Freegold is coming and price swings measured in the 100s will be meaningless to the ultimate physical gold price. When I can buy gold I am content. When I can buy it from a non-overbought position, I am pleased. When I can buy it from an over-sold position, I am ecstatic! I bought from 1650 all the way down to 1550, eating up my cash and finally using credit to snarf up as much as I could get my hands on. Now I will pay off the bank credit I used while price climbs.

A Closer Look At the Gold Chart For a Break and Run Possibility

Keep an eye on gold for the next few days to see how it handles any consolidation here.

The formation, at least so far, is remniscent of the breakout that led gold to the all time high last year.

It could fail and retest some lower support level. We need to be aware of that possibility. But a consolidation with a subsequent gap higher and breakout run could be a wild ride.

Posted by Jesse at 5:48 PM

Gold shattered overhead resistance near $1680 and has continued higher as momentum based buying is coming in driving out panicked shorts who were hoping for a halt in the advance to occur as the market encountered bullion bank selling originating at $1680. The FOMC made that a mirage as a zero interest rate environment for the next two years means an environment in which it pays to own gold. The yellow metal pays no interest but at this point, neither do short term Treasuries and those offer no protection from currency induced price increases. Just look at what is occuring across the commodity sector today as hedge funds now push the price of food, energy and metals in a northerly direction. Forget about tame inflation – that just vanished.

The sheer size and scope of this fund buying has driven out everything in front of it except for the strongest of shorts.

Gold has light resistance starting at $1705 (it is right on this level now) or so and extending towards $1720-$1725. The latter is the important 50% Fibonacci retracement level from the all time high to the recent double bottom down near $1535. The bears are going to make a stand near this level. If the fund buying remains as robust as it was today – the bears are going to be routed. Pushing through this cap will set it up to make a run at $1750. If the shorts can defend $1720 – $1725 then we should see a retracement back towards the $1700 level initially followed by $1680 where support should emerge.

By the way, the HUI and some of the gold stocks dodged a very big bullet today courtesy of the FOMC. They were in severe danger of breaking down technically.

Presented with little comment, Gold is now at $1693, about to take out $1700 and the best performing asset class of the year: YTD: Gold +8.2%, S&P +4.9%, 30Y TSY price -1.44%. Furthermore, since this FOMC statement implies more easing imminent, it simply delays full blown LSAP so its “effectiveness”, read max Russell 2000, peaks with Obama’s reelection campaign.

Chart: Bloomberg

The intermediate trend is still lower, but price is just now testing the trend line. If we can get 3 closes above this trend line I feel pretty confident that a move to the right shoulder of a head and shoulders pattern that resolved in December is in the offing. This is the 1750 area shown.

The long term weekly chart shows price dead center within the trend channel. The 3.5 year trend remains intact and as strong as ever. This chart should be appreciated by the paper players and they need to ask themselves if 200% rate of return would have been sufficient for doing nothing more than tossing some coins into the sock drawer? Was the trading worth it? Physical gold, get you some.

Chart Of The Day: By 2109 Everything Will Be “Sustainable”

Submitted by Thomas Gresham of Gresham’s Law,

After almost a century of the centrally planned dollar we’re delighted to present a timeline of the most amusingly disturbing speeches delivered by the Federal Reserve & Co.

http://www.financialsense.com/contributors/dan-collins/2012/01/19/the-world-continues-preparations-for-the-end-of-the-global-dollar-based-ecosystem
On December 25, 2011 it was reported that the world’s second and third largest economies will open currency swap lines in a move to side-step the U.S dollar and conduct trade in their own currencies. In a meeting between Japanese Prime Minister Yoshihiko Noda and Chinese Premier Wen Jianbao they officially announced their governments’ intentions to conduct bilateral trade in yuan-yen without using U.S. dollars. The Japanese government said direct yen-yuan settlement should reduce currency risks and trading costs. Japan also announced it will start buying Renminbi bonds to hold as a reserve currency.
China and Japan, long time adversaries who disagree on most issues with regards to foreign policy can agree on one thing…to stop using dollars. Japan also topped off a busy week by signing a currency swap agreement with India with the same stated goal of moving bilateral trade between the two countries out of the USD.
Fascinating the above news item was announced on December 25th – a perverse Christmas gift one might cynically say ! But rather than a radical break , this just represents a trend that includes Russia and China trading with Iran in currencies other than the dollar. And just yesterday , india announced it would buy oil from Iran in rupeees – so much for following the West’s oil embargo demands !
The move away from the dollar mirrors a similar trend we have seen – the fleeing of investors from stocks as the game has begun to viewed as rigged beyond rational participation. Stock volumes ex HFT trading have been dropping over the past 18 months or so ( following the infamous flash crash in May of 2010 ) , retail investors have withdrawn funds from domestic mutual funds over the same timeframe and with the advent of the MF Global debacle for investors – revulsion has moved to the CME as well after all , once bitten , twice shy – losing 1.2 billion in customer accounts has a funny way of making the corruption clear .
So is it really a surprise to note that during the timeframe where retail investors have fled the broken hovels called markets , that a grand uptick in color revolutions have bloomed . ” MENA ” came into the lexicon last year and as the New Year as begun , Syria and Iran adventures stand in the on deck circle – just waiting for their turn at bat. Does the media even discuss the ongoing chaos of Militia rule in Libya anymore , how often do you read anything about the NTC , Is Saif ( Gaddafi captured son ) still alive and who holds him captive again ? When push comes to shove , what will Russia and China do regarding any mass destruction campaign directed toward Iran – how long before we see / read or hear about some type of incident is the Strait of Hormuz? To the last point , recall Iran warned when the USS John C..Stennis left the Gulf at the end of December , the advice from Iran’s Army chief Salehi was ” I recommend and emphasize to the American carrier not to return to the Persian Gulf.We are not in the habit of warning more than one time. ” While a date has not yet been announced , US officials expect the next transit of a carrier to be routine – and they are probably correct. But what if Iran chooses to start a War at the time and place of its own choosing ? Any predictions as to where such an other event might take us would depend the reaction of numerous nations , whose agendas aren’t aligned with the West.
As Iran gears up for its latest Great Prophet exercise in Febuary , let’s see if the next Carrier transit occurs during that same timeframe – and then we shall see what happens next !