Gold Under The Gun

By: Joseph Russo | Sun, Jul 15, 2012
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Gold Under the Gun

No matter how hard global central bankers try to inflate away the intractable debt-bomb that continues to explode in slow motion, they just cannot seem to make any headway.

The folly of QE-1 and QE-2 have done nothing but exacerbate the contrived bubble in monopoly bonds, which is the only fuel known to financial alchemists that enables a fraudulent debt-based Wall Street-Washington-Centric and global economy to function.

Ever since the big end-game bang in 2008, the powers that be are doing everything possible to preserve their totalitarian monopolies.

We all failed BIG-TIME in allowing these statists to re-write the rules and elevate their powers in assigning those responsible best capable of fixing things. They fixed things all right - for themselves. While we had them begging on their knees, we should have let everything fail once- and-for-all, liquidating all of the egregious debts brought about by the grand masters of the financial universe and their enabling fraudulent monopolies. Had we done so, our world would not have ended - THEIR world would have ended, and more likely than not, we would already be well on the road to recovery instead of serfdom. The next time they come calling - and they will come calling - DON'T BE FOOLED AGAIN.

Back to the surrealistic point: Crying out-loud, what banker in their right mind would lend to overleveraged and unfit borrowers at such ridiculously low interest rates. Short of putting bankers at gunpoint or some twisted operational statist equivalent, the excess reserves building in the system are going nowhere until things change and RESET themselves in dramatic fashion.

Comex Gold


Short and Near-Term Outlook:

Yes, something certainly appears to be afoot throughout the whole of the financial sphere. Markets seem to be reaching inflection points whereby they are either going to break down dramatically or crack-up in similar fashion.

With tension and compression building to such levels, we suspect the desired statist outcome would be for an erratic non-directional rollercoaster resolution as opposed to a definitive and sustainable run in either direction. Only time will tell which, but no matter the outcome going forward, it is likely to garnish some headlines and attention.

In the chart above, we see gold bumping up against its short-term downtrend at the 1596.50 print high. The rise from 1554.40 harbors potential to affect an impulsive five-wave advance however, the jury remains out, as we show only three-waves of advance thus far.

Bear in mind the failure of a similar five-wave advance, albeit smaller, from the 1564.40 pivot low. At present, gold continues to render lower lows and lower highs, confirming its downtrend of the past 10-months.

The chart is self-explanatory for most however, we will enumerate some contingencies that should enable one to maintain a clear grasp of measure and status over the short-term.


Bullish:


Bearish:

"We shall move toward a graceful departure with a recent quote from Doug Noland's latest contribution entitled, Game Theory & Crowded Trades, a must read.

"I would today argue there is a momentous unappreciated cost to central bankers' "reallocations" and "incentive distortions:" they've nurtured one massive, and now hopelessly unwieldy, "crowded trade" throughout global risk markets. And, as seasoned traders appreciate, once a trade becomes "crowded" the nature of how a trade - how a market - performs tends to turn highly unpredictable, erratic and, in the end, unsatisfying. Over time, fundamental developments are overshadowed by the brute force of market technicals. For example, "crowded" short positions will tend to "melt-up" into dramatic short squeezes before eventually collapsing. And crowded longs tend to turn highly speculative, yet inevitably susceptible to air-pockets and abrupt downdrafts. Locate a "crowded trade" and you've found a captivating place where it's easy to lose money. In general, crowded trades fuel speculation, unpredictability, and Bubble Dynamics - along with a lot of frustration and eventual disenchantment."


The US and Global economy is turning Zombie-Japanese

Zombie Capitalism

If the statists succeed in temporarily solving the incalculable debt-crises by somehow unleashing yet more debt-based money to kick-the-can further, or succeed in gracing us with the potential splendor of experiencing more green shoots than had graced us the last time around, then gold is going to head much, much higher.

We suspect those embedded at the helm of debt-based power, and those entrenched with monopoly control of debt-based money creation would rather preside in totalitarian dominance over a prolonged Japan-style deflationary period as opposed to allowing the system to reset, and affecting the needed repairs to the many structural flaws inherent within it.

As long as markets continue to react similarly to the current statist prescriptions, gold shall remain under the gun of downward deflationary pressures. One needs look no further than the results of what 20-years of zombie-induced deflationary monetary policies have brought to Japan.

Since peaking at $1,920 dollars an ounce in September of 2011, trends in gold have turned down in all three timeframes. Granted, the super long-term secular uptrend remains intact, and it shall remain wise regardless of price, to continually apportion and occasionally rebalance physical possession of gold to a ratio of 10% - 20% of one's entire net worth.

 


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Joseph Russo

Author: Joseph Russo

Joseph Russo
Chief Editor and Technical Analyst
Elliott Wave Technology

Joseph Russo

Since the dot.com bubble, 911, and the 2002 market crash, Elliott Wave Technology's mission remains the delivery of valuable solutions-based services that empower clients to execute successful trading and investment decisions in all market environments.

Joe Russo is an entrepreneurial publisher and market analyst providing digital online media solutions designed to assist traders and investors in prudently and profitably navigating their exposure to the financial markets.

Since the official launch of his Elliott Wave Technology website in 2005, he has established an outstanding record of accomplishment, including but not limited to, ...

  • In 2005, he elicited a major long-term wealth producing nugget of guidance in suggesting strongly that members give serious consideration to apportioning 10%-20% of their net worth toward the physical acquisition of Gold (@ $400.) and Silver (@ $6.00).

  • In 2006, the (MTA) Market Technicians Association featured his article "Scaling Perceptions amid the Global Equity Boom" in their industry newsletter, "Technically Speaking."

  • On May 6 of 2007, five months prior to the market top in 2007, though still bullish at that time, he publicly warned long-term investors not to be fooled again, in "Bullish Like There's No Tomorrow."

  • On March 10 of 2008, with another 48% of downside remaining to the bottom of the great bear market of 2008-2009, in "V-for Vendetta," using the Wilshire 5000 as proxy, he publicly laid out the case for the depth and amplitude of the unfolding bear market, which marked terminal to a rather nice long-run in equity values.

  • Working extensively with EasyLanguage® programmer George Pruitt in 2010 and 2011, the author of "Building Winning Trading Systems with TradeStation," he assisted in the development of several proprietary trading systems.

  • On February 11, 2011, he publicly made available his call for a key bottom in the long bond at 117 '3/32. Within a year and half from his call, the long bond rallied in excess of 30% to new all time highs in July of 2012.

  • For the benefit of members and his general readership, he responded to widespread levels of economic and financial uncertainty in the development of Prudent Measures in 2012.

  • He publicly warned of a major top in Apple on October 26, 2012 in the very early stages of a 40% decline from its all time high.

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Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/