POG down 4.00 today.
Saw some more comments on Stockman Forum:
Hi LeRoy,
In response to your question:
>reply: Norm, do you, Dan or Wade have any idea when this gold
>depression is going to turn around?...LS
I would never try and guess where the POG is going especially when it
seems like the deck is stacked against it. I am not one to believe in
conspiracy theories and I am not saying that there is a conspiracy...but
recent central bank activity around the world definitely suggests that
they have a vest interest in seeing a strong US dollar and weak POG. As
Wade has been telling us for along time now: the only indicator to look
at in terms of where the POG is going is the US $ index. ( Wade is
giving excellent coverage to this aspect of the POG and has been for
quite awhile now ). As long as the dollar is strong gold will stay low.
The DOW crashing and the dollar falling will trigger a run back to gold
but it seems like something catastrophic will have to happen to see this
occur. I do not possess a degree in economics to properly explain what I
see as a house of cards - one just has to look at what happened in SE
Asia and the shockwaves we all felt...IMAGINE what would happen if the
DOW "corrected" like the Hang Seng!!! All I know is that the financial
powers in this world want to see a stable and strong US dollar and it is
going to take alot to change their thinking. Alan Greenspan is probably
the best MM in history!
;-)
Regards,
norm ( goldbug)
zzzzzzzzzzzzzzzzzz
To LS,
FM: SteveH
This is from the privateer:
"As long as the Gold price stays below $US 320, we are not going to get any
"bottom signals". Right now, not many people are paying any attention to
Gold, and most of those that are paying attention are waiting to see if it
can break below the $US 300 level." (From the report on this page on Nov.
7.) Gold has now done it, closing below $US 300 for the first time since
March 1985 on November 26, down $US 3.60 on the day to $US 296.90. Until
July 1979, Gold had never traded above $US 300. Since then, Gold has only
traded below that level three times. That happened for one day in 1982 and
for about three weeks in 1985. This is the third time.
Nominally, there are now two support points for Gold. The first is at its
present level of $US 296, its 1982 low. Below that, there is the 1985 low
of $US 282. Of course, adjusting for monetary depreciation, Gold is already
far below those levels. Historically, any sub-$US 300 price for Gold is a
screaming buy. As far as a "bottom" for the price is concerned, we don't
have any evidence at all of that happening yet."
My comments:
Looking at the-privateer.com you will see the charts
show what is the tightening of the rubber band. The daily chart shows
evidence of the LB-BD (lower band price divergence as being 3. That means
three days the POG has dramatically crossed the lower bollinger, this makes
it likely that the POG will rise dramatically in the next eight trading
days (this could vary by a week either side). History supports this theory
as per above it has only done this three times. Are we to be naive to think
that this time is different. Let's discuss this. If it is different then it
will have to stay below $300 for more than three weeks to beet the 1985
record. If it isn't any different then three weeks will be the most is
stays below $300. What we know is that reports indicate that the short
position is very heavy into gold and that shorters may have a tough time
covering. We know that if the price of gold jumps as it did in 1985 $36US
in one day, that this will make big news. When the price of gold jumping
that high in one day makes news, the gold consuming public will learn that
gold is cheap and its going up. We might experience a consumer gold rush.
We have already discussed the consumer price on gold as being the largest
single contributing factor on the price of gold above all other factors.
As gold is considered by some experts to be a political metal whose price
is maintained to keep it at a fairly constant price against the US
currency, I see two factors at play. The desire of the Fed to maintain low
interest rates and a low gold price set up against the fundamental laws of
supply and demand that as the latter pulls against the former will only
proove once again that things that go down eventually must go up. The Army
Corps of Engineers learned of controlling the laws of nature when they
built the extensive dike system on the Mississippi River and more
specifically the delta region of that River. All there work was nearly
wiped out when a barge got too close to a diversion damn and nearly broke
the whole river free. So too, attempts in the political arena to control
the price of gold, rumors of Central Bank selling, all appear to be
attempts by politicians or their accountants to hold down the price of gold
against an ever increasing flood of waters against the damn of gold prices
all the while not being able to control the river traffic that may produce
that lone-barge that almost ended it all.
We of the VSE-experienced arena know all too well the "short squeeze." We
have seen the volatility that this can cause. The clock would now appear to
be tick, tick, ticking. The POG has put us on notice that the battle has
now begun. Will history repeat itself and show a gold rally to be in full
swing by June of next year, with a one or two day gold rally in the next
few weeks to set it in motion or will the political arena be able to hold
it down the likes of which they have never been able to do before?
So how does this affect us investors in mining and resource industry stocks
on the VSE? Here is an exerpt from the Privateer web site again, "Gold
bottomed on February 25, 1985 at $US 282. This low came at the end of a
four year period during which the trade weighted value of the US Dollar had
risen more than 30%. The big jump in the Gold price on March 19, 1985 (it
rose $US 36 or 11.88% in one day) came in conjunction with two other
events. First, a very small "run" on some Savings and Loans in Maryland and
Illinois. Second, the announcement that the U.S. was a foreign debtor
nation for the first time since 1918. When you view the more detailed chart
(click on this one), note the Gold was flat for more than a year. The Gold
price, which had closed at $US 339 on March 19, 1985 - did not close above
$US 350 until June 10, 1986. When it exceeded $US 350 again a month later,
the Gold stocks started to roll. The other item to take note of is that
although Gold itself continued to climb after the crash of October 1987,
gold stocks crashed along with the markets. Gold itself sold off in early
1988 as a concerted global effort was made to prop up the U.S. Dollar."
One might agree that strong similarities exist between the present
situation and 1985. We don't have the two historical events that occured
then but we may be brewing our own version of these (the barge). We do have
the cyclically low price of gold. We have an Asian market and economy in
trouble. We have the technical charts on gold. We have mines that have been
hurt by the artificially low price of gold. We have shorters who are
digging themselve in deeper and deeper. It would seem that the barge's
lines are unravelling, no one has posted the dock-side watch and it will
soon slide away from its mooring and history will repeat itself again. The
VSE will likely rebound in this scenario. The Guru said, "It won't take
much of an increase in the price of gold to cause the VSE to rally." He
said that people just need to know that the bottom has been reached. In my
opinion, the POG will prevail, sooner or later, it will prevail. But if I
am reading the tea leaves correctly, the TA on gold shows a possibly rally
in less than two weeks. Whence gold goes so does the VSE.
SteveH
zzzzzzzzzzzzzzzzzzzzzz |
