Gold and dollar by the numbers.

We are witnessing the divergence of the US Dollar from Gold. The announcement by Brazil that it will defend the real (i.e. intervening to reduce the value of the Real or increase the value of the US Dollar) coincides with an increase in the value of the US Dollar. No public response.

We are beginning to see definite tendencies with the Gold market. Manipulation is now obvious as well as substantial.

Taking the 200 DMA from May 09 to today yields a more or less straight line with a slope of $25/month. Lately the 200 DMA is rising a bit faster. Volatility, however, has risen quite a bit. This shows up in faster rises, which are then knocked down by obvious intervention. During July and August last year the gold price had risen $200/2 months. During November last year, gold price had risen $150/month and during December, gold price had risen $150. Each rise is followed by the dumping of significant amount of gold that brings back gold price to the moving average.

The dumping takes place within an hour. No attempt is made to cover up the dump or get the best price. The only objective is to knock down the price. It can be concluded that gold prices would rise 4-6 times faster, were it not for the periodic intervention. Each dump is multi ton and may be ending up in China.

This then is the source of the volatility. When the entity that does the dumping runs out of gold it can dump, expect gold prices to rise parabolically (actually exponentially, meaning much faster than now). Gold and silver miners are cheap and I expect them to break out of the wedge on the upside.

Manipulation of the Gold and Silver Markets.

For the most part of last year, gold and silver miners fell, even as the gold price continued to rise. The best answer I get is that certain entities were trying to suppress gold prices in order to produce a slow rise in gold prices and a slow loss of value in the fiat currencies. The XAU is now producing a wedge and the miners have been increasing. Even during the last drop, the miners held better than gold and are now swinging up.

The second graph shows the action in gold price. Here is where manipulation is shown clearly and perhaps the reasons for it. The price of gold is allowed to increase gradually and every time gold prices start turning parabolic, we see an intervention to crash prices. These are indicated by red arrows. Note that the drops are accompanied by increased volume. Someone is dumping gold to decrease the price. King World News describes what happened during yesterday's dump. Someone comes in and begins to dump a large amount of gold in a short time. The Seller is not trying to achieve a reasonable price. The objective of the Seller is to depress price. In a few days the price is allowed to rise and gold price goes up as a more or less straight line with a certain slope. Note that there was a dump in September, December and yesterday. This is not ordinary sales, but a dump.

The next two graphs show the gold and silver prices on a shorter scale. This pinpoints the dumps more accurately. KWN articles suggest that the dumps are rear guard action by the Central Banks to keep the gold market rising slowly and prevent a panic in the market place. My calculations indicate that gold will reach a new high at the end of May. Perhaps the central banks hope that if they can hold out till then, the "sell in May" adage will ease the upper pressure on prices. The forecast is still for higher gold and silver.

Dollar rallz over_

The rallty in the US Dollar began in Nov 2011 and is on the verge of being over. We have seen the top for the USD on Jan 15 or 16, the we saw the "kiss of death" rally on Feb 16 when the Dollar tried to rally above the 50 DMA, but bounced off the average. Now we see the Dollar testing its support level at 75.5.

Is gold ready for the breakout?

There are a number of interrelated quantities that I have been tracking. The gold price has been coming back from the low of 1,550 or so. The first question is; have we resumed the gold bull market rally, or are we seeing a reaction rally? The top graph shows the gold prices for the last two years. We see a confirmation of the breakout from the correction then we see a retrenchment and what appears to be a resumption today of the breakout. A confirmation of that will occur when gold closes above 1,770.

An important indicator of what people expect to happen to gold prices is what they expect to happen to the gold miners. The second graph down shows the XAU, the gold + silver miner index. We have two descending lines. The yellow color is the last and steeper drop in the index and the green color is a longer term descent. XAU has broken out of the steeper descent, but is yet to break out of the longer descent.

Another important determinant is the gold to oil ratio. Today this ratio is 16.5. Oil has closed above $105/bbl and is forecast to rise to $115. If it does close above $115, then it has little resistance to 140. The gold to oil ratio is important, because one drives the other. For example, gold going up had driven up oil prices. Now, it is oil prices that are pushing gold prices. At a gold to oil ratio of 16.5, a barrel of oil price of $150 would push gold price to 2,475. If the ratio goes to 27.5 and crude goes to $150, this would put gold at 4,125.

A second determinant is the ongoing debt crisis in Europe. The eyes are on Greece. This is a country that has been in a recession for 4 years. The results are scary. Unemployment among young Greeks is 50% and 25% of companies have gone bankrupt in the last 4 years. Greece's economy contracted 14% and is set to contract another 7%. The bailout of Greece is really a bailout of European banks.

Oil prices feed back on economic growth. A 10% rise in oil price is calculated to produce a half percent drop in our GDP. Iran is cutting oil to Europe and Saudi Arabia is cutting production to increase prices. Need I say it? Yes indeed! This will not end well!

Steady till...

It is time, once again, to review the evidence re the progression of the gold market. It has been twenty five weeks since gold hit a double top. Then it took a substantial correction. Someone else has figured out that the time it takes to reach a new high is proportional to the size of the correction. The high occured in August and 25 weeks has passed since then. The graphic analysis suggests an interval of 38-40 weeks untill the next high in gold price. This amounts to between 3 to 4 months more.

The first graph on top shows the gold price. The graph shows a breakout from the down pattern and a reaction to it. So, we wait to see if the next peak confirms the breakout.

The second graph shows the combined gold and silver issues. It, too, shows a breakout pattern, but then the graph goes back to the down trend line.

The next three graphs show two gold miners and a silver miner. We see the same pattern. Breakout waiting to be confirmed.

There are several reports that I will try to summerize. Many people and institutions have taken steps to have enough cash on hand to respond to what may come. The estimate is 7-9 Trillion dollars. No point investing it in Treasuries: the banks will give you 6% gain in 3 years and 9% loss during the same time because of inflation. The US Stock Market is the highest in 4 years, so there is nothing gained in buying stock. There are a number of possible events that could rock the boat. There is the real possibility of recession in Europe and even in the US. Should such occur, stocks will be clobbered, along with gold and miners. On the other hand, the ECB stands ready to inject $1T worth of Euros into the economies of Europr and the FED is ready to open the money spigots.

So, my calculations peg the start of the next big move in gold to start in about 3-4 months. Larry thinks so too.

The beginning of the ened.

Monday, Larry's weekly update came out predicting the coming collapse of the Stock Market, gold going to 1,400 maybe 1,200 (in round numbers), silver to hit $22/oz and the Dollar exploding on the upside. Since then the Market kept going up, gold shot past 1,700, silver hit $33 and gold mining and silver mining stocks added at least 10%.

I was tempted yesterday to collect the data and show you how this is true, but today it seems obvious. The question is WHAT HAPPENED?

Tuesday the FED Committee met and yesterday they announced their intention. Unlike Larry thought, the FED is not going to wait untill the Stock Market collapses but intends to hold interest rates near zero through 2014 and they "did not rule out" FURTHER BOND PURCHASES (note the plural). QE here we go again. From Europe comes the news that holders of Greek bonds are not willing to take a 50% loss - a step which is irrelevany anyway, since Greece is not able to pay even that levekl of debt. Meanwhile, the Finance Ministers of Italy and Spain tell us that their countries are unwilling and unable to do the reduction of deficit as agreed to and demand that the ECB provide the funds to buy their bonds and stimulate the economies of European countries.

So the US Dollar began to plunge and is now flirting with 80 on the down side and gold has begun to rally. Gold and silver miners are gapping up today and the gold and silver bears are scrambling to cover their shorts. Tower Hill Mine (which has $400/share value of gold in the ground at GOLD=2000/oz) shotpast $5.5/share.

Let's put it this way: chances of Larry being right are rapidly diminishing.

Gold and silver moving.

I did not post about this. KWN is always talking about the coming shorts squeeze, so I kept quiet. What they report though is that the silver market is 20M oz short and that the silver was borrowed from SLV and sold. So, silver rocketed past 31 and is now over 32. There is serious backwardation for silver and Europeans are dumping the Euro as fast as they can. The Dollar had stopped rising, even as the Euro falls, and the CRIMEX has "compliance problems." Meaning that they can not deliver on paper contracts. Is this the early phase of the coming panic?