Gold – 23 Nov

The paper gold traders put on a modest drop in the price of gold today after it was smacked smartly earlier in the day. Never lose sight of the fact that physical buyers do not set the price of gold, they follow the paper hangers and the paper consumers lead. This is a good thing for us physical buyers that want to accumulate ounces of gold. We are getting the bargain of the century at these paper prices where 90% plus of the gold inventory is paper. Without this paper, gold would be many multiples of the current price. We are buying into unseen leverage that will manifest when paper ignites in a hyper-inflationary inferno.

Paper traders are looking at a rather depressing chart. After all, shouldn’t gold be going up as safe haven while the EU comes unglued? Physical gold is certainly being acquired as a safe haven, hand over fist. Unfortunately there is no limit to the supply of paper gold and it can and will be sold mercilessly to serve the paper lovers’ purposes. Many are selling their paper gold to raise sorely needed cash. Some are selling with the hope of shaking out weak longs that are clinging to life with their fingernails. Some are doing the business of those who want to discourage the idea that gold can be an acceptable alternative to the dollar. Finally, the dollar is rising because it is perceived to be safer than everything else and will show up as a lower gold price in dollar terms. I find the whole thing quite boring. In fact I do not trade paper anymore. I refuse to feed the monster and choose to remove my capital from the system. I hope you will choose to do this as well. Besides, time can be spent in more productive ways. I am perfecting new recipes for my barbeque pit, with the help of some of my favorite malt beverages!

The art and skill of TA is still a worthy thing to learn and practice. There will be a day when it will once again be useful. So in that spirit I offer the chart. Critical support is holding around 1680 for now. A close below this level opens the way for a further downside move to 1604. The 45 and 100 day moving average is forming a congestion zone around 1700 that will need to be cleared to shake of the bearish trend of lower highs and lower lows. 1730 awaits as critical resistance that must be cleared to generate a move back to 1800. Stochastic is over-sold. Look to see if stochastic continues lower and stays below 20 for 3 days or more and embeds. This will change the character from over-sold to that of chart that is showing increasing downside momentum. All rallies from that point must be considered to be traps until stochastic loses the embed and crosses back across the 20 level.

Whether we go and visit 1600 or not is largely dependent on how the panic from all things European goes. Know this, the 200 day moving average is currently at 1592 and is gradually climbing. It is a rare occurrence to see price retrace to this level, and when it does it does not stay there long. In other words, we are within a 100 dollars of the best price buyers will likely see. This is of course assuming the paper game can continue on. If this is the end of paper gold and the dollar, then this chart will likely see price go significantly lower. This will occur as people shun paper gold and sell it with wild abandon. Do not wait for these lower paper prices thinking that you will then buy your physical gold. You will find that physical gold will be largely unavailable. Like a store on Black Friday with a sale on the season’s hottest gift, where the shelves are emptied minutes after the doors are opened to the public. People will literally stampede into physical and wipe out any supply that is available. Shortly after the plunge, paper gold will cease to exist and price discovery for physical gold will be undetermined for a period while the monetary plane reconnects to the physical plane. Then Freegold valuation will emerge.


The weekly chart chart shows that we are still trending nicely long term. RSI is right at the point where it is likely to find support and reverse. We are likely forming a consolidation triangle and are approaching the apex where resolution will occur. If we breakdown lower, the 45 week moving average has provided a floor for prices, currently at 1576 and climbing sharply. This reinforces the 200 day moving average as support near 1600. Again, short of the end of the paper market I believe 1600 is as bad as it can get for the paper longs. For physical buyers it is time to buy with all the paper you can get your hands on. Do it now. Freegold is near people.

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