The action in gold has proven to be too much for me to take.
I had a massage appointment this morning. I was supposed to relax. Instead, I found my mind drifting back to Greece, the PIIGS, the euro and the impact on gold. The more I thought about it, the more I was convinced that any eventuality in Greece is gold-positive. When the massage ended, I raced to my car to check the gold price and found that it had once again been thwarted by the EE, at a price just below 1550.
Driving home, I started thinking about the importance and relevance of 1550 to the Fed. Beyond there lies the alltime closing high of 1558.40. Gold making new alltime highs makes additional QE that much more difficult to announce. Let me stress this: Gold at alltime highs does not preclude or make impossible more QE, it simply makes it more challenging from a MOPE standpoint. Remember and never forget that, through the bullion banks, the Federal Reserve manages the perception of future inflation. Keeping the price of gold in check and its upside controlled is one of the tools the allows the Fed to fool investors into believing that inflation is low and, therefore, interest rates can remain low...and... interest rates must remain low for the funding of our entire national debt-deficit-ponzi. That said, the Fed has no choice. QE will continue regardless of whether or not gold is above 1550. Therefore, though that level is being fought, the EE doesn't necessarily have to win.
Take a look at this daily chart. This is what ultimately pushed me over the edge and back into gold a few minutes ago.
I am now the proud owner of some August 1550 calls as well as a spread of the December 1600s vs the December 1700s.
Lastly, you're probably asking yourself, "how does this jibe with Turd's expectation of summer doldrums"? Frankly, it doesn't but I'll try to square it this way:
1) I could be wrong about the doldrums. Turk and Santa are a lot smarter than I am.
2) I still do not expect a big silver rally until inflation expectations heat up again with the appearance of QE3. Therefore, other than the soon-to-be-worthless July $40 calls I own, I am not buying silver...at least for now. So, gold good, silver dull.
With 25 minutes to go, gold is at 1545.20 and thinking about making one more run at 1550 before the close. I would absolutely love to see it close the pit session at about 1548. That way, the Asians and Indians could take a stab at 1550 while the Monkeys sleep. We'll see. More later after the Greek vote. TF
