Gold Reached 1070+ over night - Miners still strong

Gold continues to put in a strong showing. It topped 1070 briefly over night and you will see on the next graph. Now, below, we see gold in a long term upward trough (black trend lines) which accelerated this month (red trend line). The RSI is pushing upward as is the MACD. All in all this is a technically strong graph. Thus, we would expect gold to push higher in the near term. A correction somewhere soon is not out of the question, as gold has sprinted forward very rapidly.

Over night we see that gold did break 1070 (red arrow). Once again the boyz jumped in (green arrow). However, as we have seen in recent days, the demand for buying took over and the price quickly recovered. It is early in the day, but gold looks strong for now.
Over night silver hit almost 18.10 (red arrow), but has been slammed twice (green arrows) by the boyz. Nevertheless it seems to be on the rebound at present.
The Gold Miners are giving a strong showing with both the RSI and MACD showing strength and indicating upward movement for the near term.
The Gold Bugs Index gives us a technically strong graph. There is a longer term upward trough (black trend lines) and a very strong MACD with a yet to be determined RSI which appears to be turning slightly downward.
In general, it seems to me that the mining stocks, though over all strong, are not giving us the leverage which is to be expected. They seem to be lagging the upward momentum of the metals, themselves. I would expect the mining stocks to be going through the roof with the recent moves in the metals. It is yet to happen. Perhaps, as/if the metals continue, then the miners will catch up quickly.

Like some of the miners, BULM is beginning to show weakness. Both the RSI and MACD are turning downward. There is a wedge (red trend lines) from which we should expect a breakout. It can be either upward or downward. BULM has been in a narrow trading range (black trend lines) between about 0.70 - 0.80. Notice, also, in the lower part of the center section of the graph that the volume in recent days has been low and moving lower. This is a speculation as I have always warned. Currently, I am not selling, and will wait a bit longer to see the break out. Gold continues to be strong and I am expecting a cyclical high near the end of December. If that occurs, all the miners will respond.

Our star non-mining performer is BYD Company. Below, is a very positive graph with both the RSI and MACD showing strong performance. Note the purple arrows in the lower portion of the MACD section. They highlight the last upward moves. If you check the same portion of the present upward sprint, you will see that it is just starting. There has been a good bit of current publicity on BYD Company and that is always positive for a stock. The red trend lines provide an upward moving trough with the current price in the middle of the trough. Though the price movement is beginning to level off, I would expect it to go still much higher. I would see it as a blessing to be able to add to my portfolio at a price just below $9. However, that may never happen.
From The Daily Pfennig: "Good day...and what a day it was in the currency markets on Tuesday! The rout on the dollar continued, and was broad based with gains in every currency we trade. The commodity based currencies led the pack, as the weaker dollar fueled a big run up in raw material prices. Reports out of both Asia and Europe signaled the global economy is recovering, and bolstered investors looking for a way out of the falling dollar."

From Bloomberg:

Gold Declines as Rally to Record Encourages Investors to Sell

(Note: This article contains a number of comments by various individuals, I selected this one on the dollar)

The Dollar Index, a six-currency gauge of the dollar’s value, slipped 0.5 percent today, taking its loss this year to 7 percent. Oil futures gained as much as 1.4 percent to $75.15 a barrel in New York and have soared 68 percent this year.

“The all-night printing runs at the Treasury are chipping away at the dollar’s ability to hold value compared to other currencies and commodities,” Mike Sander, an investment adviser at Sander Capital in Seattle, said yesterday in an e-mail. “With dollar weakness, inflation fears, a huge budget deficit, energy prices creeping up, metals such as gold, silver and copper will be pushed up in price.” Read the entire article HERE.

From Prudent Bear:

When Money Becomes Worthless

• by Martin Hutchinson
• October 12, 2009

The Financial Times last Tuesday noted a disturbing new trend – hedge fund and other investors are increasingly seeking to invest in physical commodities themselves, rather than in futures. Given the excess of global liquidity, this is not entirely surprising. It does, however, raise an ominous possibility of a supply shortage in one or more commodities, caused by investor demand that exceeds available mine output and inventory. That could potentially produce a collapse in economic activity similar to that from the 1837-41 and 1929-33 liquidity busts, but with the opposite cause.

The problem arises because of the size of the world's capital pools in relation to its volume of trade. The total assets of U.S. hedge funds in September 2009 were $1.95 trillion (down from almost $3 trillion a year earlier). That compares with total U.S. imports of goods and services in 2008 of $2.1 trillion. However, in addition to the hedge funds, there are other huge pools of money available for deployment in commodities markets. For example China and Japan each have around $2 trillion of foreign exchange reserves, while Saudi Arabia and the Gulf states have comparable sized pools of liquid assets available for investment. Since the available inventory of commodities is a fraction of their annual production, we could potentially end up with an extreme case of too much money chasing too few goods. Read it HERE.

The, above, articles present a clear picture of what is happening to the dollar. It is on the way down, down, down, and no body knows how low it will go. There is no doubt of the direction and as central banks continue their bail out, we will see it go lower very soon. That is one of the main causes of the action of the precious metals. There are growing in dollar price, because the dollar is dropping.

From Ed Steer's Gold and Silver Daily: "Well, the Bank Participation Report was posted yesterday... for positions held at the end of trading last Tuesday... the same as Friday's Commitment of Traders report. I knew it would be ugly, and it was. In silver, two [2] U.S. bullion banks are short 38,375 Comex silver contracts. They are long two contracts... and you read that right... 1+1=2 contracts! As a percentage of total open interest, these two U.S. banks are short 29.1% of the entire open interest... and considerably more than that if you take out the spread trades. This is a record high net short position in silver by the U.S. banks. Those two U.S. banks would be JPMorgan [holding the lion's share] and HSBC USA.

Now for gold. Two [2] U.S. banks are short 116,790 Comex contracts. They are net long ten [10] Comex contracts. This net short position by the two U.S. banks represents 24.1% of the entire gold open interest on the Comex. The two banks are the same as for silver."

This is the incentive for these banks to play games with the price of the precious metals. They are not constrained by current regulations and are allowed to run freely in the futures markets. They are breaking the regulations and should be reaping punishment for their intervention. However, they are too big to fall and, obviously, to big to regulate. Thus, we, the investors are penalized rather than protected by our "benevolent" government agencies. What a surprise! Remember the Godly purpose of civil government is to protect the life, liberty, and property of the citizens. It is not to regulate the citizens.

From Reuters:

Bank of China's Zhu Min may join IMF

BEIJING, Oct 13 (Reuters) - Zhu Min, an executive vice president with Bank of China, might take up a senior post at the International Monetary Fund (IMF), a local Chinese newspaper reported on Tuesday.

The 21st Century Business Herald cited unidentified sources as saying that Zhu, a former World Bank economist who has worked at the Chinese bank since 1996, would be the first Chinese to occupy a top job at the Washington-based IMF. Read it HERE.

China is enjoying a reviving economy and debt free stimulation by building new and upgrading old infrastructure. They are also moving toward center stage in international financial dealing. The future seems destined to be in and from Asia. God can and does use pagan nations to punish former God fearing nations which have left Him for other gods of all types.

We must return to the God of our founders before it is too late. We must prepare our children, grandchildren, and succeeding generations to live a God centered life. If we do not, America will cease to exist. Folks, as we have become a pagan nation focused upon ourselves, immoral activities, and materialism, we have left our former love of King Jesus. Thus, we are under the wrath of the living God. We must repent and return to Him before it is too late.

Here are our miners: CEF 13.99; CDE 24.147; DROOY 7.26; GDX 49.29; GFI 14.98; GG 42.66

GLD 104.04; HL 4.95; HMY 11.79; IAG 15.02; KGC 23.64; KRY .25; NEM 47.42; PAAS 24.52; SLW 14.47; SSRI 22.14, VGZ 3, and BULM 0.81 (with a bid of 0.60 and an ask of 0.89.

Gold is 1060.80 and silver 17.86 with gold on down tick and silver on an up tick. The DOW is up 111+ to 99.82.

Best to each, Doug