Dear CIGAs,

The Battle for $1,000 gold continues with Saruman and Sauron (Goldman and Morgan) attempting to crush the rebellion against their rule by the forces of honest money. Sadly for them, the rebels succeeded in beating them back and thwarting their plans.

I should point out that today’s close is the HIGHEST WEEKLY CLOSE ever for gold. Prior to this week, it managed to poke through the $1,000 level on more than one occasion but was never able to CLOSE above $1,000 at the end of those particular weeks. Technically, this is bad news for the perma bears.

Both Euro gold and British Pound priced gold look good on the charts with Euro gold knocking on the door of the 700 level once again while BP gold is trading over 600.

Gold’s gains are even more impressive considering the weakness in crude oil today and the run up in the bond market. It appears to me that gold is gathering as much safe haven buying as the bond market. This is a break in the pattern that has held for most of the year which generally sees gold moving lower when bonds move higher and vice versa. If this continues it would note a sea change in investors’ sentiment towards gold who had adopted what I consider the rather stupid view that gold was a “risky” investment to be shunned during times of risk aversion while paper bonds were incredulously viewed as safe stores of wealth. Imagine that – limited, finite supplies of a yellow metal which has stood the test of time considered to be a gamble while unlimited, ever-increasing with no end in sight, debt obligations of what has to be regarded as a bankrupted nation are viewed as a sound place into which one’s wealth can be socked away for safe keeping! Historians looking back at this period at some point in the future are going to marvel at this.

The HUI made a new one year high today as well although it is fading off its best levels of the session as I write this. Looking at its chart, the 400 level was very strong technical resistance so a weekly close above this level is very constructive. It stands a good chance at making a run towards 450 as long as it holds above the 400 level.
The Dollar continues to sink lower although most of the damage was done overnight during the Asian session and early European trading. It generally moved sideways during the day session here in the US. There does not look like a whole lot in the way of technical support on the charts until you get closer down to the 74 level on the USDX. As things stand going into the close, it looks to be on track to have its lowest weekly close in a year. The RSI is near the oversold level on that chart so we could see a pop next week but that would merely be a blip in the long term downtrend that has resumed after the greenback put in a massive double top near the 90 level earlier this year.

Click chart to enlarge today’s hourly action in Gold in PDF format with commentary from Trader Dan Norcini

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