Jim’s Mailbox

Posted at 2:53 PM (CST) by & filed under Jim's Mailbox.

Dear CIGAs,

My very humble take is Jim is correct and insiders are engineering a normal 33-38% correction without realizing it.

The Chinese and other wise buyers will add aggressively at 1350-1370, which would be approximately one third correction from 2002 bottom to 1900 top.

Many central bankers in China etc will try to make insiders pay by getting rid of some dollars in exchange for gold. The Chinese bankers all went to top schools for PhDs then worked at JP Morgan or Goldman on the international trading desk before joining the People’s Bank. They know how rigging works and how to twist the rigging to their advantage .

Speculators seeing other profit areas are temporarily distracted from gold. I look for them to return to long side about 1350.

Humbly,
Monty Guild

 

Jim,

I know you’ve got to be swamped, so I’ll keep it brief.

In my opinion, the primary motivation for TPTB take down of the PMs yesterday is that it scared them silly to see 33 year record high prices in gold priced in yen this week after Japan announced devaluation of their currency. They had to do whatever it took to scuff the shine off PMs being a viable alternative to fiat currencies. That’ll last only until enough see there is no physical in quantity available at these prices having no relation to supply/demand.

CIGA Shane

 

Dear Ben,

The lesson and total take away from Cyprus is for your sake, please get out of the system before that fork lift comes for you.

Your dedicated watchman,
Jim

Hi Jim,

Thank you for Mr. Shultz’ comments. I don’t know if you would enjoy reading this or not, but I’ve included today’s report from what I consider a most competent strictly technical market writers, Gary Savage, just for interest sake. The dollar cycle he points out is particularly telling, I feel.

Dollar:

The first story today is the dollar. It has been my theory now for several weeks that the dollar rally is a mirage. Usually a dollar rally signals a flight to safety during a period of risk off, corresponding to an intermediate degree correction in the stock market.

That was not the case this time. The dollar wasn’t rising because of a flight to safety. The dollar was rising because the yen, euro, pound, and Canadian dollar were all dropping down into intermediate or yearly cycle lows at the same time. This put tremendous upward pressure on the dollar for no other reason than traders were selling everything else.

That phase has ended. At this time I’m confident that at least 3 out of the 4 currencies have completed their decline and begun intermediate degree rallies. The only one still in question to complete the bottoming cluster is the yen. I’m not sure that one has made a final bottom just yet. Once it does, and starts to rally, the dollar is going to come under extreme pressure. All of these currencies produced extremely sharp ICL’s and regression to the mean is going to push very sharp upside moves as they come out of these lows. That is going to translated into a very hard move down in the dollar.

As a matter of fact, on Friday the dollar marginally pierced the previous daily cycle low. When this happens it indicates that the current daily cycle has “failed”. All that means is that a pattern of lower lows and lower highs has begun. This almost always signals that an intermediate decline has started.

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Click on chart to enlarge

So we now have an intermediate dollar cycle where the second daily cycle has already failed. We should now have at least two and possibly three more left translated daily cycles before a final intermediate bottom. Since the intermediate cycle is left translated it should move below the prior ICL. I think it will drop well below that level, maybe even far enough to test the may 2011 lows. The extreme currency weakness we’ve seen in other currencies is now ready to infect the US dollar.

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Remember we are talking about a yearly cycle low starting. Yearly cycle lows are scary as hell events. The summer of 2011 in the stock market was a yearly cycle low. Gold is in a yearly cycle low, granted a somewhat artificial one, but you get the picture. At yearly cycle lows it seems like the world is ending.

Since the dollar move is somewhat artificial (85 billion a month) just like what is happening in gold, we can probably expect the same kind of hopeless conditions at the bottom later this summer. By the time we get into the final bottoming phase the dollar is going to be in complete freefall.

 

Hi Jim,

Hope you are recovering from the onslaught of emails. I have a quick question.

Paul Volcker was quoted in his memoirs regarding gold in the 70s:

"Joint intervention in gold sales to prevent a steep rise in the price of gold, however, was not undertaken. That was a mistake."

It appears the powers that be today have listened to this wisdom. How long can they realistically pursue this course of action? Is the answer simply rooted in the physical market?

Thank you for your time,
CIGA Gordon

Dear Gordon,

Only as long as the BRICs permit it. Things have changed even if prejudice blinds the judgment of the elite in the West.

Respectfully,
Jim

 

Jim,

If the rest of the world knows the plan, i.e., suppress the gold price to prepare for confiscation here and who knows where else, might they just go along with it knowing they can buy in at a lower price later? Of course the dollar is losing (devoid of) value. But can’t Wall Street, given enough trading currency, put the dollar price of gold anywhere they want to? China and Russia might just watch and wait and maybe contribute to the down-pressure.

Do you think the confiscation scenario is in the world’s future? If it is, would a lower gold price be to the US government’s advantage? Questions like these are beyond this gynecologist’s expertise.

CIGA Jerry

Jerry,

The insiders will be long gold on the final day, and confiscate nothing.

Jim