Rapid changes are taking place in the valuation of gold and the US Dollar. The first graph shows the aborted breakout of the US Dollar. As I reported to you in the previous post, the slow mo collapse of the European (Socialist) system was forcing European investors to look to the safe haven of the US Dollar. Consequently, the US Dollar began a rally, which was documented by a breakout from a wedge pattern. The breakout occurred on the upside. Yesterday's events aborted this breakout and the US Dollar retreated sharply into the wedge pattern. Will it break out on the downside now? Still waiting.
Gold, in the meantime, set a new high by blasting past the 1,571 price. The next graph shows the daily gold price and we can see that it is flirting with 1,600 and overbought conditions. The final graph shows the weekly gold chart. Although, gold has entered the next upleg and is advancing rapidly, it is not yet in the parabolic phase.
The PM markets reflect the changes occurring in the financial world. Greece, Portugal and Ireland can function now only with borrowed money. This shows up in the valuation of their bonds. Greece now is rated just above default, while Portugal and Ireland are rated as junk. Italy has been downgraded and cost of servicing its debt is going up rapidly. Spain has just started this progression. European authorities are meeting to do something about this crisis. WE COULD BE WITNESSING THE CRUMBLING OF SOCIAL DEMOCRACY (European-style Socialism). Eastern-style Socialism fell, because its leaders could no longer lie that Central Planning worked. Socialism in China was abandoned, because the Communist Party of China saw that it was an economic dead end. Since then China has been blooming economically.
Meanwhile, the US has been put on a downgrade watch.
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