Gold – 30 Apr: Don’t play with your fiat edition

Somebody really, really, really wanted paper gold to go down yesterday. 7501 contracts were sold in an instant. Anybody concerned about the price they would fetch for their paper gold credit would have layered their sale. This was done for effect. I am guessing the perp wanted to initiate a waterfall. So sorry, no workie today. What resulted was a big hammer candle on so so volume. So other than the rocket scientist and everyone else that took his paper gold, there really wasn’t anything spectacular going on.

Price is forming a saucer or rounded bottom, where 1625 is the bottom. My expectation is that we are going to test the top of the recent sideways trading channel near 1680. The 45 day moving average lies just below there at 1670 and is the first level of resistance. When price was smacked it went down to the 18 day moving average and found support. This was the second in a row that price found support at that critical moving average. If today’s low is above 1645, we will have a higher high and higher low in place and a new short term technical uptrend. Since price is above the 18 day moving average, my way of trading says that the chart warrants a long position with a stop just below 1645. However, playing that game makes you food for the dickhead that likes to dump 7500 contracts in one second.

The best trade is to buy physical gold when the dickhead creates a fire sale. While the paper players play with their fiats, you simply hand over some dollars and walk with the real stuff. Rinse and repeat. Then you can get excited and be very pleased when the dickheads strike.

The expanded view shows the rounding bottom or saucer more clearly. RSI is challenging its trend line and a solid break above 50 is needed for a sustained reversal. There is a death cross on the chart, but death is not in the cards because the fundamentals do not call for death yet. Make no mistake however, there will be death on this chart. Death will come in the form of dead gold credit, or paper gold. When this occurs you will see the waterfall to end all waterfalls. We will laugh at dickheads like the one who played with himself yesterday. There will be many multiples of what he sold yesterday dumped unceremoniously onto the market. Paper gold will fall hundreds of dollars per day. This event will signal the arrival of Freegold, where gold is freed from credit and the $IMFS. People will dump their paper gold and seek the real thing. Do not wait for this to happen in order to get your physical at bargain basement prices. There isn’t anywhere near enough gold to replace all the paper ounces with real ones. Real gold will quickly disappear and you will be left holding and playing with your fiat. Unseemly!

Head and Shoulders reversal:

Everything is still on course as far as long term trend. Notice how narrow the Bollinger bands have become? That tells you something is about to happen and volatility will be increasing. My bet is price breaks higher. This may be your last opportunity to buy with a 16 handle. Stochastic is a leading indicator and it is hooking nicely right at support. Notice MACD is also hooking and has taken on a positive trajectory, setting up a bullish cross of the slower line by the fast line.

The really big picture is the stacker’s chart. Mish says he’s going to play with his fiat again and trade his paper gold for paper silver. This chart says that is not very smart. What does the next leg higher look like?  Notice how the slope is increasing? Don’t play with your fiat. Don’t be a chump. Stack the precious and sit on your hands. Let this chart work for you until paper gold dies. Then you won’t need a chart anymore. In fact you will know for the first time what the real value of your gold is, not what your fiat says it is.



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