Gold bull enters different phase.

The gold bull market entered a new phase. Large swings will be coming and downswings will be fast. We have seen this already. Gold price was down over $200 in three days (to $1700 in fact) before gold recovered and went up $130 in three days. Both, the up and the down phases have been faster. All eyes will be on the gold market Sunday night and Monday morning. Silver has not yet moved much.

The gold miner index corrected only about 5% while gold corrected over 10%. The expectation is that gold miners will outperform gold 3 to 1.

KWN expects gold to test $2000/oz during September and hit $2,100 by the end of the year. With the newer, faster moves of the gold market, these levels seem entirely possible and even within a shorter time span.

Changing patterns.

One of the more interesting face of the PM market is the sequencing of events. Look at the first graph (the PM miners) and you see a downtrend in prices. This is supposedly due to shorting by hedge funds and will result in a shorts squeeze when the miners break out.

The second graph is that of silver. Silver has been heavily shorted and manipulated, but it has been in an ascending (but slow) pattern. Silver has closed above $42 today, which chartists believe will lead to a rapid rise in silver.

The third graph is that of gold prices. Gold has broken out of its normal trading channel and is beginning to rise at an accelerating pace (even more apparent with the MACD). Gold has wiped out a lot of shorts above 1,680, but is believed to be propelled now by the entrance of retail investors.

We can expect a sequence of breakouts: gold first, silver second and miners last.Experts expect silver to blast through fifty to set a new, all time record. Gold is expected to move past $2,000, but it is not clear what will happen then. Some forecasters see a government interference at $2,100, some at $2,300. Considering that we have a lawless President, who refuses to defend and enforce the Defence of Marriage Law or the Immigration Law, one hesitates to guess what this criminal will do to restrain the gold rally.

Disaster in slow mo.

Have you seen the video of the collapse of the stage at the Indiana State Fair? It was slow enough to actually observe it, but too slow for some of the victims to get away. That is what is happening to Europe. During Q2, Europe's exports fell by 4.9%, enough to knock Germany's growth to 0.1%. Europe actually did better at 0.2%. The last meeting of German and French heads of State resulted in the decision to NO INCREASE in the EFSF funds (an equivalent of our TARP bailout funds). So what? u might ax? What this means is that Italy and Spain will get no more bail outs and now that France is coming under scrutiny...well, Germany had it with the bailouts. And the European banks stand exposed to attacks on the interest rates they have to pay on their bonds.

Contagion is spreading to the US. Actually, US banks hold a lot of dollars doled out by the FED. They do not want to loan the money out, because the FED pays them interest. As soon as they start loaning that money out, inflation will accelerate even more than it is doing now. So, the FED has two alternatives: 1. do nothing and watch the economy deteriorate more or 2. do another QE and accelerate inflation. If inflation picks up, it will force up interest rates on Treasuries, which could add as much as $1T/yr to the deficit. The CHANGE is HOPE-less.

Meanwhile, Rush is ridiculing the Obama re-election theme (re-elect me for all the good I would have done if the Republicans did not stand in my way). O'Bungle had a Democrat Congress for two years! Every day, the reckoning draws nearer. Gold is on the march. Today it hit 1,822/oz.

Where are the gold miners going?

The Gold Miner Index is working on the right shoulder of a reverse Head and Shoulder with the head being about 30 units below the neckline. This implies a breakout of XAU to 220+30=250.

The Two-Headed Monster.

There is an interesting interview with Jim Rickards on WTN. Rickards asserts that we are in a Depression brought on by excessive debt, resulting in tremendous Deflation (the loss of value of assets). Bernanke is trying to "cure" the condition by slowly devaluing the Dollar. In other words, creating Inflation. Rickards' solution is to devalue the Dollar all at once, pegging it to gold as 1 oz gold=$7,000. The US then would nationalize the banks and repudiate its debt. It would work like a reset.

There are several problems with Rickards' solution. Repudiation of US debt would wreck pension plans and leave the banks in government hands. Remember the US Post Office? Not exactly a thriving enterprise.

Fortunately, we already know how to cure a Depression. After WWI, the Country nosedived into a Depression. The President died in office and it was the Country's luck that Calvin Coolidge became President by succession. Silent Cal, as he became known, slashed government expenditures by 50% and ignited the "Roaring Twenties." That is the solution. While Medicare and Medicaid need some trimming (and Social Security should be privatized to increase returns), the problem resides in the Federal budget being too high causing Deflation. When the US entered WWII, Roosevelt got rid of "mark to market" which was an instrument to perpetuate the failure of banks.

How about the mining shares?

The DJI can't make up its mind whether it is still in a Bear Market or out of it and gold is consolidating of wiping out the shorts and finally passing above the 1,764 point. Now what? we might ask. And what about the gold and silver miners? So, I brought up a few on BARCHART and I was rather astonished by the similarity of patterns: a building REVERSE HEAD AND SHOULDER.

The first three graphs are Fortuna, GPL and Impact silver (silver miners), followed by NAK and THM (gold miners). The patterns suggest that a breakout is coming in about two weeks.

John Embry on gold miners.

London trader's predictions.

KWN reports that shorts have been wiped out or badly mauled. The same Trader tells us to expect silver to rise by $2/day increments and gold by $50/day.

Gold and silver miners, on the other hand, have pulled back from earlier gains in the day. Are we building toward a shorts squeeze in the miners?

Is the Bear Market over?

Yesterday appeared as a classic end to the Bear Market of 2011. Following a drop of over 400 points, the DJI took off on a 660 point reversal. It appeared to be a classic Bear Market reversal. However, the reversal took place not on a classic FED action, but on a promise that the FED would continue its inaction. So, the Market is dropping again. Clearly, Investors are expecting a QE and stocks will drop untill the Market sees the green.

In the Gold Market, the rally continues. After yesterday's test of 1764 twice, gold is up again at 1,772. Mining stocks were up earlier the sold off again. As you see from the graph, gold is beginning to rise in a hyperbolic fashion.

Gold storming 1,764.

Gold is storming this important resistance. As I told you (and I gleaned this from the experts), the 1,764 level will be strongly defended. Last night, gold surged to 1,782 then sold off. This morning gold surged to 1,765 then sold off to 1,733. Overseas markets are opening.

Meanwhile, the FED eased and told the Market it planned to keep interest rates near zero. The Stock Market replied with a huge rally. IMHO, this is not enough and I expect other measures.

BTW, gold is clearly changing the slope of advance. Silver is quiet and so is the ZAU. This is an institutional rally in gold.

Changes in gold markets.

Two milestones of the gold markets are important now. The 1,680 level was taken out and invetors and institutions are buying in. That pushed gold prices past 1,700 and in fact gold went past 1,760 overnight. By this morning, however, gold was back to 1,740 and references to the 1,760 figures have disappeared. Gold is again rising today.

We can expect the 1,764 figure to be defended as the Stock Market faces its Barakalypse (also called Obamageddon). It still has not dawned on the populace that the best way to safeguard monetary value is through gold and gold mining stocks.

I am tracking two other issues. The first one is the FED meeting today. Some form of QE announcement is expected by some people. Preliminary figures point to a higher stock opening. The second thing is the imbalance in the Markets. Gold/silver ratio has again risen as well as the gold/XAU(gold miner index). The gold/XAU ratio has been around 6 and has now gone to 9. The rise in gold price is said to be due to institutions and shorts and so far the investing public is skeptical. So, we will either see a retrenchment in gold price (gold is way overbought), or an explosion in silver price and gold and silver miners. And, will the Barakalypse continue to the predicted 9,000 before the FED intervenes or will the intervention occur earlier?

Important technicals:DJI vs gold.

Important technical considerations are becoming clear re the Markets.

One way of analysing a Bull Market is by the "fan method." This involves connecting the bottom of the Bear Market to interim tops before a strong correction. When the Market breaks below the third fan line, the Bull Market is over. Last week's 500+ drop hastened the end of the Bull. We are now n Bear Market territory, because the DJI dropped more than 10%. So, the next question is how long will the Bear Market last. That is harder to ascertain. It really depends on the FED. The FED will have to inject gobs of money into the system in order to end the Bear Market and to stop the economy from deteriorating further. The amount of money to be injected, and its timing, will decide the "when?" and "how far?"

Another import technical point concerns the gold prices. The second figure shows the test of the Gold Bull Market and 5 successful test of the 150 Day Moving Average. There are other important technical and a fundamental considerations. Gold prices fell during the 2008 Bear Market, but they are rallying now. What is the difference? In 2008, the Markets were frozen, because the switch to Mark to Market had frozen the money supply and investors had sought the safe heaven of US Treasuries. Now, the Treasuries are no longer safe havens (see the downgrades and Chinese comments - after all China is the biggest market for Treasuries) and investors are beginning to flock to gold as a safe haven.

Another important technical indicator was the gold price of 1,680. Many traders were waiting to buy in when gold closed above that. These orders are now being filled in and according to some, the rise in gold price to 2,300 is assured.

Another technical indicator will be at 1,764. If gold closes above that, it will go into a hyperbolic pattern with gold advancing very rapidly. What will propel gold prices? The coming QEs in the US and the ECB rescuing Italy and Spain by buying their bonds. In order to do the rescue, the ECB has to print a lot of Euros (the 66 or so billion Euros are not even enough for half of what they need). The Markets anticipate inflation.

Finally, we had been warned that the 1,764 level will be heavily defended. Closing above that will be a capitulation by gold bears.

Gold breaks toward $1,700.

Following the raising of the US debt ceiling and the subsequent downgrade of US debt, gold began to rally. This time overseas money is not going into US Dollars, but into gold. When overseas markets opened tonight (Sunday night), the rally was confined to gold, but silver is also up - not as much as gold. Gold was reported to have reached the 1,696/oz level, so some of the buy ins may be occurring. It will be interesting to see if the NY market follows up tomorrow and push gold over 1,700/oz.

As the US economy slows, we see oil dropping as well.

We should look for correlations. With gold up, will silver follow? and with the PMs up, will the miners finally get off the dough? Tomorrow will be an interesting day with the DOW dropping over 100 points. Look for a big reversal when the FED intervenes.

Dagong downgrades US debt to single A.

The FED does not want to accept Dagong Global Credit Rating Company, but the question is whether the Chinese govt will accept the rec and demand higher return on Treasuries. Nobody else but China has the resources to buy even part of the $2.5T worth of Treasuries the Obama regime has to sell to finance the new debt. Meanwhile gold has soared to $1,072 in early trading.

As the Euro is slowly falling apart, gold prices go down some at night, when the European markets are open and then recover when the US market opens. If the US has to print money to finance the overspending, a 20-49% inflation is to follow, say forecasters. Obama's plan to destroy Capitalism is succeeding.

Gold at 1,641: new top

Gold has set a new record this morning. This is the day that the new debt ceiling is supposed to be voted on by the US Senate. Passage is anticipated. It is quite obvious that the new high in gold reflects the Market's vote on the raising of the Debt Ceiling. Why you might ax.

The new Ceiling authorizes the Obama regime to borrow $2.4 (or 2.5)T. Since, a lot of government programs are income transfers, I have no doubt that the regime will spend the money. Since, "baseline budgeting" involves a 5% spending increase every year, a $100B cut per year (part of the Debt Ceiling deal) does not even freeze the budget, let alone cut it.

The gold price is not reacting to the fact that the "cut" is phony. The gold price is reacting to the consideration: "where will the money come from?" Two and a half trillion bucks is serious cash. Not many countries have an economy that big, let alone being able to fork over that much into the insatiable maw of the US spending machine. China's reserves are said to be near $3T, but it is highly doubtful that even China could finance this debt, assuming they wanted to. So, where will the money come from?

It is highly likely that the FED will print the money and that is propelling gold prices at a time when gold is relatively quiet. We could also be seeing short covering; a factor predicted and aired on KWN.