Gold Editorials & Commentary

Governments and their central banks have inflated the global-bond markets into a bubble that will long be remembered, and written about by market historians.

Introduction

Introduction

Gold stocks have recovered sharply following last month's panic-like capitulation plunge. But this embattled sector still remains incredibly cheap relative to prevailing gold levels, which drive gold miners' profits and hence ultimately their stock prices.

Its been a slow day so I thought I would get the Wednesday stock report finished early.

Speaking dispassionately, the chart below (courtesy stockcharts.com) shows three historically bearish break-downs (blue arrows) and three potentially important bearish developments (purple arrows).

To paraphrase Einstein, not everything worth measuring is measurable and not everything measurable is worth measuring. The purchasing power of money falls into the former category.

Or do they? Everybody thinks they know that the world is on the verge of a banking and financial crisis, but it is just one of the major effects of the real problem: SOCIALISM has reached the end of its rope. It has run out of other peoples' money.

The past couple months have been a roller coaster ride for investors and traders. Overseas headline news has made investing and trading more difficult than normal because of prices gaping up or down at the opening bell several times per week.

What a whippy week it was. Volatility spiked and then subsided into the end of the week which meant it was a great day-trading environment but then that petered off as ranges tightened for markets and stocks into the end of the week.

GLD - on buy signal.

Author Note: This is the first of three articles that examine the threats and opportunities facing the world economy.

On Friday the price action in gold caught the attention of most market participants as gold put in a monster move to the upside in light of risk assets such as the S&P500 selling off sharply.

Man-made financial phenomena imitate nature, but more importantly they are subject to the powerful laws of economic nature. The Wall Street financial engineers have built vast structures, which tragically are crumbling and soon will fall to the ground.

As of the end of May 2012, gold suffered the indignity of its first "bearish" year after its long-term bull market began in 2001.

I really don't have much to bring your way this week beyond charts.

GLD - new buy signal this week.

Summary and Conclusion

Tonight I want to bring everyone up to date on the many H&S top patterns that have been forming for sometime now. All these H&S top patterns are telling a very big story as to the direction of the world marketl.

There is a lot of lopsidedly-bullish analysis on China in the mainstream press and in the "blogosphere". Less so today than two years ago, but still enough to suggest that China's problems are not generally understood.

"When Injustice becomes Law, Resistance becomes Duty." -- Thomas Jefferson

IT'S TIME TO FACE THE TRUTH

We're still up in the air as to what is going to pass in Europe but perhaps this week we will see.

GLD - on sell signal.

I'm happy to say that this week Barron's magazine published an article I wrote on Electrical Power Consumption. You may want to buy an issue to check it out. Now down to business.

The fortunes of Europe's beleaguered euro currency have been heavily influencing US markets. Both stocks and commodities have been battered down recently by overwhelming euro bearishness.

The Biblical story is told of a tower built ever higher in order to achieve contact with the heavens, lest they be scattered upon the earth. They were scattered when the tower fell.

Gold's biggest problem since February has been one of relative weakness. This weakness in turn has kept the market-moving hedge fund players away from gold. But as we'll see in the latest commentary, that may be about to change.

"Has gold finally bottomed?" That is the big question we are going to attempt to answer in this update. Last week it bounced sharply after it arrived at the strong support at its September and December lows.

It's time to update our long-term weekly charts showing how the gold sector, as represented by the Barrons Gold Mining Index (BGMI), has performed in US$ terms, gold bullion terms and S&P500 (SPX) terms.