In the commentary this morning, I mentioned how important it was for gold to close today above the highs from Wednesday of last week. It did it! When you consider that today also invalidated the "outside reversal day" that was painted last Thursday, you're left with an extraordinarily strong picture and one where gold is looking to head much higher from here.
That may sound hard to believe. The MSM is full of know-nothings and Disinformation Agents who are working overtime to convince you that gold is in a "bubble" and fraught with risk. This is complete nonsense. Look at the chart below:
This is an orderly progression of eager buyers who are using almost any weakness in price to accumulate positions. I've circled the only time when things got disorderly. The C/C/C brought that to a screeching halt with their margin hike last week. This week, it's right back to the same, steady drumbeat we've been following since early July. So, how far can we go from here? I don't know. In uncharted territory, it's virtually impossible to predict technical resistance. Let's look for two things:
1) Another short term buying climax like we had last week. This will be characterized by similar volatility.
2) Santa's next couple of "angels". The next one is 1849 and the one after that is 1936.
From here, I expect flat to higher gold overnight as global stocks and the ES recover some into the early trading hours tomorrow. However, like last weekend, ask yourself this: Would you rather be long stocks/short gold OR short stocks/long gold over the weekend? Last Friday, stocks were up and gold was down. Tomorrow? Well, I guess we'll see, won't we.
Along those lines, check out this very important chart from Trader Dan. If you think that the current negative correlation between stocks and gold is going to continue, this chart will get your attention and it doesn't even include today's dismal performance.
Last but not least...silver. It also closed above a key technical resistance level today. As you know, a general lack of buyers and open interest has hindered the speed of silver's recovery/advance. Moves like today serve to bring buyers back in, regardless of the extremely high margin rates. I expect silver to continue to trudge forward. It will soon trade toward 41.50 and then 42. How soon it breaks through and closes above $42.30 will determine whether or not I get my $44 by Labor Day. We'll probably need to get through there by this time next week for me to have a shot. Fingers crossed. Either way, silver is looking higher through the northern hemisphere autumn. Sometime in the next 60-90 days it will reach back to the old highs, of that you can be certain.
Have a great evening. Get some rest and be ready for tomorrow. It will be very interesting! TF
9:50pm EDT UPDATE:
Gold is up $10. The ES is off another 10 points. Crude is down another $1.50. The 10-year note is back under 2%.
A lot can change in the next 12 hours but, at this moment in time, tomorrow looks like it could be a real bloodbath. Not in gold, hopefully not in silver but in just about everything else. It'll be tough to sleep tonight.
The main point of this update is the article linked below. If I had the time or the talent, I'd have written it myself. I agree wholeheartedly with the author's assertions. A must read.
See you in the am for an eventful Friday. TF