GOLD: Lead, Follow, or Get Out of the Way...
................................A Technical Hat Trick for the HUI
1. HUI takes out it's 50 dma
2. HUI takes out it's 200 dma
3. HUI's 50 dma takes out it's 200 dma
Technically, the HUI just got a hard and fast reversal
off the key 370 support level, and should now re-attract
both technical traders and momentum players.
I hope you took this opportunity to back up the truck,
because this was a classic, textbook perfect,
"discrepancy between price and risk" trade.
Gold and gold stocks were selling off hard and fast
simultaneous to the Fed cutting interest rates, and
as global central banks were doing what they do best,
-- LIE.
LIE as in: adding liquidity, using market intervention,
and propping up exports via competitive currency
devaluations.
The formula being used by the Fed is simply this:
Liquidity + Intervention + Exports
= Value and direction of the U.S. stock market.
The Fed has no choice but to keep the U.S. Stock Market
propped up at any cost, because ...
-- the housing bubble has burst.
-- billions in home equity have been vaporized.
-- the US consumer has a negative savings rate and a mountain of debt.
-- the US economy is slowing.
-- job loss and unemployment are rising.
-- the mortgage refi-atm machine/security blanket no longer exists.
-- the US Dollar and consumer purchasing power has collapsed.
-- inflation has exploded.
-- the liquidity crisis in the financial markets is spreading.
-- and it's a U.S. Presidential election year.
The drowning U.S. consumer simply has no other life preserver
to cling on to -- other than the stock market.
With the US economy slowing and given the fact that 45% of
S&P earnings come from abroad... a weak US Dollar is not only
necessary to prop up those export earnings, but it also
monetizes and inflates away the debt.
Central bankers have added unprecedented levels of liquidity,
and with an unprecedented level of coordination and
cooperation between each other.
From the Bank of Japan jawboning the Yen - trying to keep
Yen-carry traders in check, to Ben Bernanke talking tough
about headline inflation, while simultaneous turning up
the printing presses to hyper-drive... to Jean "Tricky"
Trichett trying to keep FX traders on their toes by injecting
an incredible 350 Billion Euros ($500 Billion in US Dollars),
and then withdrawing 420 Billion Euros just days later...
Central bankers are using coordinated market intervention
like never before.
The US Fed, Canada, England, the ECB, and even the Swiss
have all gone wild... coordinating liquidity injections
into global markets.
Then there's money supply...
-- US "reconstructed" M3 up between +16-18%
-- China's M2 up + 18%
-- India's M3 is up +23%
-- And over 1 Trillion dollars in open Yen-carry trade leverage.
With this unprecedented level of coordinated intervention,
liquidity injections, and money supply growth by global
central bankers... any correction in gold, or gold stocks
into "present" fundamentals - is a back up the truck
trading and buying opportunity.
And as far as the tough talk from Bernanke about inflation,
from Paulsen on "strong dollar policy"...or, from Goldman on
shorting, or selling gold -- just remember one thing:
"Trade on what they do -- not on what they say"
...because their gameplan is entirely based upon a LIE.
And worry not - because in a world filled with LIE's...
Gold is the truth that will always set you free.
S.O.T.B. |
