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Alas, after a precious metal rout the likes of which we saw on Friday, the very first task on the agenda for a purist like me is to assess the longer-term impact of the technical action for both gold and silver and then assess. Before I proceed, there is a Ballanger Rule that absolutely mustbe heeded, and that rule is this:
“Only in the gold and silver markets does one sell “breakouts” and buy “breakdowns”. Why? Because they are rigged.”
With a decidedly leftist government about to assume the helm, money spigots firmly in the crosshairs, the last thing the financial spin doctors need is a soaring precious metals market. The action on Friday into a disappointing jobs report and decomposing U.S. dollar was predictable; they need to keep things orderly in the financial arena to offset the disorder in the political arena. Hence, we got a totally familiar intervention and reactionary panic and while it is near-term both infuriating and absurd, it is simply “noise” of the highest order.
Interestingly, Friday January 8th was as close to a carbon-copy clone to the infamous “Sunday Night Massacre” of April 13, 2013 when, during the overnight session, certain “entities” dumped literally four times annual global gold production into the paper market exchange crushing a decade long uptrend. Friday’s volumes reported on the Crimex had nothing to do with the movement of actual gold; it had everything to do with the pricing of gold futures. As subtle a difference as that may appear, one glance at the weekly chart posted above reveals a market that remains in a powerful uptrend that will remain in effect even if the price pulls back to $1,700. Now, I do not subscribe to the view that prices are headed lower over the near term. In fact, I believe that the odds favour Friday’s Crimex low of USD $1,827.80 as being “THE” low for the move. The weekly chart removes the “noise” from my analysis and portrays a much more benevolent picture than a daily or hourly chart which is what is watched day to day, hour by hour, by all forms of Millennial and Genexer portfolio managers whose collective psyche has their definition of a “long term investment” being in and out by lunch hour but only if the Ritalin fails to kick in.
