Crude and Rude
Considering that crude oil has continued to wash out today and is nearing last Monday's lows, the fact that gold and silver are both nearly unchanged is actually quite remarkable.
Recall that crude oil was a major topic for discussion during Friday's podcast. After bouncing Monday, crude fell back all week and the trend has continued today. As I type, I have a last of $64.29 in the Jan15 contract. This is just a few pennies off of the day's lows and is within sight of last Monday's "panic" low of $63.72. Breaking last Monday's low seems like an eventuality at this point and, when this happens, there's really no reason not to expect crude to fall toward $60, perhaps even a few dollars lower.
What's remarkable, frankly, is that crude could be this weak and yet gold is hanging in there, especially in light of the still-falling yen and "normalized" GOFO.
And the GOFO thing really is quite telling. Recall that on Friday the 29th into the early trading of last Sunday, The Forces of Darkness and the momo-chasing specs tried really hard to jam price down and re-align it with the yen. They failed spectacularly and the resulting ORD candle caught the attention of many an "analyst". Prices looked almost certain to have found a floor and seemed poised to <GASP> rebound into year-end and 2015. So what happened next? Suddenly and mysteriously, gold appears. Just a little at first but now, in just five short days, GOFO has completely flipped from historically negative back to just plain old "normal". Note last Monday in the red box and today in the blue box.
Rather incredibly, there are still those shills and apologists out there who claim that fluctuations in the GOFO rates are entirely due to changes in the underlying LIEBOR rates. Uh-huh. Has LIEBOR moved 65 basis points in the past week? No? I didn't think so. Instead, what I see is a panicked London and Bullion Banking Establishment which just stared down a physical default abyss and somehow managed to procure some metal from somewhere to put out the fire. Good for them. Nice job. Let's see what happens next time.
And again, as discussed in Friday's podcast, we almost HAVE TO expect more paper selling this week...which is why today's relative strength is so surprising and even encouraging. We'll have to see what tomorrow brings but having gold hang in near $1195 and silver near $16.25 is far better that what I would have expected.
Referring to the charts above, you can clearly see the downtrend that has developed in gold ever since GOFO flipped last Tuesday. The key level will again be $1180. If, God forbid, a rally can develop instead, crawling back above $1206 would be nice and then, if it were to really get going, our main target remains a close back above $1220. Without question, if $1180 is broken, the key level to watch will be $1135-$1150.
In silver, price remains above and out of the main channel from July (marked in blue) but it continues to be contained by the upper and lower bands marked in red. IF A RALLY CAN DEVELOP, the area around $16.65 is still key resistance. Watch that level closely as a close above there would lead me to believe that $17.50 is next.
Finally, just a few items that I want to make you've seen as we begin the week. First, this little beauty that I found through ZH. The author picks at the BLSBS and notices even more statistical "issues": http://www.alhambrapartners.com/2014/12/05/a-matter-it-seems-of-faith/
We've spent quite a bit of time lately discussing a pending/possible "daisy chain" derivative collapse. If you're worried about this too, you might want to read this: http://theeconomiccollapseblog.com/archives/new-law-make-taxpayers-potentially-liable-trillions-derivatives-losses
The great Dr. Ron Paul has an excellent piece where he's "caught" his former co-workers inching us even closer to WWIII: http://www.ronpaulinstitute.org/archives/featured-articles/2014/december/04/reckless-congress-declares-war-on-russia/
And more on NIRP in the USA, from the WSJ via ZH: http://www.zerohedge.com/news/2014-12-08/nirp-arrives-us-tbtf-banks-tell-customers-move-their-cash-or-be-charged-fees
As I close, I see that crude is now under $64 at $63.94 and just pennies away from last week's low. Regardless, gold and silver remain UP at $1195 and $16.30. Again, let's see what the rest of the day brings...