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.