I think we should all be very encouraged by the action overnight and into this morning. In terms of the decline, the bottom and the nascent recovery, things sure seem to be following script quite nicely.
The simple fact that Wednesday's low in Feb12 gold was 1567.60 was followed by yesterday's low of 1566.60 is enough to make me grin and chuckle a bit. I've consistently stated 1550-60 would be the bottom but that I could be off a little in that I'm just eyeballing things and drawing them out with a ruler and a sharpie. Coming within $7 is definitely close enough. Now, the key is, what happens next?
Of course I could still be proven dead wrong. Gold could plummet today or next week and crash right through 1550. However, I'm highly confident that it won't. There's a reason the decline stopped there. It would take some serious, fundamental changes to drive price much lower.
Late yesterday, I gave you $1600 as an important level to watch today and next week. Lo and behold, just as price surged through 1600 a few hours ago, dramatic capping measures were employed by the Forces of Darkness and gold was pressed back. I have a last of 1586. Silver was making a move on $30, too. Clearly, The Cartel does not want gold to immediately snap back and that's OK. Taking time and building a stout foundation and base is an essential precedent for the explosive price moves I see coming in Q1 of 2012.
As mentioned yesterday, I expect this base-building "project" to last 2-3 weeks. Some folks disagree, most notably this report that was posted to ZH earlier today. Don't get me wrong. If gold reverses here and quickly moves sharply higher, that would be just fine and dandy with me. I just don't expect it to play out that way.
OK, that's all for now. I'll check in again later, once we see what the day brings. TF