The Confidence Game Is Failing

126
Thu, Feb 11, 2016 - 10:38am

I guess we're beginning to see why gold rallied so sharply last Friday on the afterhours Globex. What we have here are the early stages of a global loss of confidence in the omnipotence of the central bankers planners. As confidence is the only "asset" backing their scheme, a growing loss of confidence is utterly devastating and this begins to lead the world back to the certainty of gold and silver.

Once again, events are moving very quickly so we'll try to sum up as best we can...

The big action overnight was the continued collapse of the USDJPY. It fell rapidly through 113 and 112 before reaching a low of exactly 111.00. This was the maximum pain and embarrassment that the BoJ could bear and they reacted quickly, with an enormous intervention of nearly 2 full points:

But it's not just confidence in the BoJ that is failing, this is a global phenomenon. We have the Swedes moving deeper into NIRP: https://www.zerohedge.com/news/2016-02-11/sweden-slides-further-nirp-cut...

European sovereign risk is soaring and DeutscheBank, which just yesterday was "saved", is falling again while its Credit Default Swaps blow out to new highs!

The high yield junk bond market is falling again today, too. As you can see, the proxy for high yield junk...the HYG...is making new lows and is back to levels not seen since early in 2009.

So, getting back to the USDJPY...we're going to watch this closely. We told you Monday that there was no support until 110 and we told you yesterday that the BoJ would soon intervene. But we also told you that the "half-life" on whatever they did would be very short after the complete calamity of their NIRP announcement two weeks ago. Though the pair is currently 112.34, I still think it's heading to at least 110...if not 106! This means there is still all sorts of equity collapse and gold rally to come.

But now let's get to the fun stuff...gold, silver and the miners!

Not only has gold made a higher high versus October, with today's it has also made a higher high versus May! Not too shabby!!

And look at it on the weekly chart and against The Nemesis Line. IF GOLD CAN CLOSE ABOVE 42 TOMORROW, I DON'T SEE HOW/WHY IT DOESN'T EXTEND TOWARD THE HIGHS OF LAST JANUARY NEAR 10.

Which brings us to silver, which gold has "led" since the rally began back in late December (which you'll recall we predicted into heavy levels of doubt). It went something like this:

  • Gold double bottomed and then silver double bottomed.
  • Gold broke back above $1080 and then silver broke back above $14.
  • Gold started to break through its 50-day and 100-day MAs and then silver did the same.
  • Gold broke through its 200-day and then silver rushed to catch up and break its 200-day, as well.

Ah, but here we are. As noted above, not only has gold made new highs versus October, it's also made new highs versus May. And where is silver? It's still below its highs of October! So, will it soon rush to "catch up" again? Why wouldn't it?? IF gold holds and even extends here, why wouldn't silver extend sharply higher? To where? See below:

The HUI has made another new high today as it's currently up 10 points at 159. WOWOWOWOW!! If you want something to pull for today, watch to see it we can close above Monday's highs near 157. The would be a positive sign for the short term.

As I close, I've got $1242, $15.70 and a USDJPY of 112.12. Don't stray too far today. This is getting really interesting!

TF

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