Gold dropped as much as $14.80 to $874.00 by midday in London, but it then stormed back higher for most of the rest of trade and ended near its high of $905.65 with a gain of 1.72%. Silver fell $0.355 to $11.64 before it also rallied back higher in New York and ended near its high of $12.265 with a gain of 1.29%. Both metals have also continued to rally higher in after hours access trade.
Euro gold rose to about €697, platinum gained $15.50 to $965.50, and copper fell a few cents to $1.45.
Gold and silver equities fell over 2% at the open and then rose to find roughly 5% gains by late afternoon before they fell back off a bit into the close, but they still ended with over 4% gains.
The Economy:
The stimulus plan passed the House last night as expected and now moves on to the Senate where it could face a larger struggle.
Tomorrow at 8:30AM EST bring fourth quarter GDP expected at a dismal -5.4% with some expectations calling for as much as -7%. The Chain Deflator is expected at 0.6%. Chicago PMI for January is expected at 34.0 at 9:45, Michigan Sentiment for January is expected at 61.9 at 9:55, and the fourth quarter Employment Cost Index is expected at 0.7% at 10AM.
Oil fell on worries over weak demand while the U.S. dollar index rose as the euro fell on the view that Europe is worse off than the US.
Treasuries fell despite their historic safe haven status as traders fear the market will not be able to absorb the massive amount of supply due to come on the market to fund stimulus plans and other measures aimed at helping the economy.
The Dow, Nasdaq, and S&P fell markedly as economic data came in notably worse than already horrible expectations and reinforced worries over a severe economic downturn. Some serious doubts were also raised over the potential success of the “bad bank” plan.
Among the big names making news in the market today were Allstate, Royal Caribbean, Eli Lilly, Continental Airlines, Ford, 3M, Altria, US Airways, Sony, Kodak, Wells Fargo, the New York Times, and Delta.
The Commentary:
“Gold is shrugging off the moves in the U.S. $ which has become volatile and jumping both up and down. When it was rising gold jumped $50, then consolidated as the $ fell. Now the $ is rising again the gold price is rising too.
The technical picture of gold is very favorable and the rise we have seen today is gold being vigorous in consolidation pointing to an investment against uncertainty and a disturbed financial system on many fronts.
The long-term investment demand through the gold Exchange Traded Funds is extraordinarily high and likely to rise still further as these funds prove their liquidity can accommodate bigger volumes.
What's more is that the demand is coming from institutional fund managers of all sides of the investment spectrum.”- Julian D.W. Phillips, www.goldforecaster.com
“Dear CIGAs,
It looks like someone forgot to tell the US equity markets that they were supposed to be “stimulated” by passage of the $825 billion and rising “stimulus” plan approved by the Dems in Congress last evening. Then again perhaps investors looked at the plan and were not “stimulated” by its details since all those digital TV’s that it gives away money for are not made in the US but overseas. I did want to let the readers know that I sent in an invoice to the feds in the amount of $25,000 requesting a direct payment to me personally so that I could purchase a really nifty 4 wheeler that comes with a built in cooler for hauling cold drinks on those outings in the great outdoors. I will let you know when I get the check so that you can also apply. I am not worried about the cost because when I am gone from this planet I will be leaving it to my kids since they, along with their grandkids, will end up being the ones that are paying for this anyway.
By the way, some one has calculated that the size of the package means that the feds could send every man, woman and child a check for $2,700 or $22,000 for every person living below the poverty level in the nation. No doubt that could be increased a bit if they eliminated the $50 million that the bill throws to the National Endowment of Arts and $ one billion for Amtrak, which has not shown a profit in 40 years!
Even the bond market has finally figured this one out – as lousy as the economic data gets (did you see that new home sales hit a 14 year low according to today’s data release) the bonds still cannot muster much of an upward move. Traders there are slowly coming to realize that bonds are not such a “safe haven” when the feds are multiplying them faster than ACORN can register non-existent or dead voters. Bond traders rightly fear a tidal wave of supply that is going to overwhelm whatever demand still exists for them.
The bond chart has turned absolutely horrendous with today’s sell off breaching a short term support level which had emerged near the 128 ^15 level. There looks to be nothing in the way of technical chart support until down near the 100 day moving average at 125 ^08. About the only thing that the bond bulls have going for them is the extremely oversold level but that is not a lot to hang your hat on once sentiment shifts, especially in a market that had blown up into a bubble of cosmic proportions. Tomorrow’s weekly and monthly close in the bonds will be significant.
All of this contributed to gold’s rise from support – if bonds are no longer safe havens then where can one go with their wealth to protect it from the depredations being inflicted upon it by Central Bankers and ignorant politicians. Answer - Gold. Pause here as the camera pans in closer to zoom in on the bullions coins I am holding in my hand and then pans back out so that you can see the 800 telephone number to phone so that you can purchase some gold and pay for the cost of the advertisement.
Seriously, sometimes I get the feeling that we sound like a TV advertisement for gold but when you look at what is transpiring in the world around us and see the folly that passes for statesmanship among our leaders, you get the idea that you are watching a train wreck in slow motion. The monetary authorities and the politicians set the stage for this mess, greed on Wall Street took over and now the monetary authorities and the politicians are somehow supposed to fix it all. It reminds me of the story of the clumsy janitor cleaning a store full of fine crystal – he knocks over some of the crystal and attempts to sweep it up but in the process the handle of his broomstick knocks more crystal off of shelves that are behind him. As he turns to deal with that mess, once again the broomstick takes down more crystal to the point where he has managed to ruin nearly everything in the entire store. It would have been better off if he had never even attempted to clean the store in the first place.
Technically the price action in gold is most encouraging. After stalling out at $920 due to bullion bank price capping, gold probed lower looking for buying support and found it almost exactly on the topside of the Downsloping trendline from which it broke above last week. This is classic, and I do mean “classic”, bullish price action from a technical perspective – a triangular consolidation formation in which the market is coiling tighter and tighter and then breaks out, sees a retest of the breakout point and then rebounds in the direction of the initial breakout.” - Dan Norcini, More at JSMineset.com
“All,
About a week or two ago, I forwarded an article suggesting the Chinese were starting to unload their massive ($1 trillion-plus) holdings of U.S. Treasury bonds, given the risks involved in the U.S. markets. This follows an article last month noting that the Chinese are suggesting equally massive increases in their gold holdings.
The Chinese have massively increased their U.S. Treasury holdings during the financial crisis this fall (which is far from over, by the way), likely because they were simply moving funds from all the Freddie Mac and Fannie Mae bonds they were selling when those two vile companies went under.
They and the entire financial world have always viewed U.S. Treasury bonds as the ultimate safe haven, which it has been due to a roughly 30-year bull market in bonds. Even over the past few months when MASSIVE red flags have showed up, such as exponential increases in U.S. debt and money-creation, still Treasuries kept rising. Of course, in hindsight we see that the Chinese were a big part of this, but scores of clueless money managers continued to chant the brainwashed mantra about U.S. Treasury bonds being a safe haven. It doesn’t hurt when this market was supported by recent U.S. government promises to buy Treasuries with freshly printed money (insane, right?), or that every media outlet under the sun cited the mantra as well.
But now that is changing, and changing big. Despite all the market manipulation, and jawboning, and brainwashing, we are now, for the first time in my 20 years watching the market, seeing Treasury Bonds go DOWN with the stock market, while gold and silver are starting to really take off. Even in a “down year” last year, gold was still up roughly 5%, and given this seismic change in capital flows, my guess is that the “bad guys” trying to keep you out of gold and in U.S. Treasury bonds are starting to get beat, and beat badly.
Not only are the aforementioned bearish factors SCREAMING to sell U.S. Treasury bonds, and not only are the Chinese now a potential seller (and don’t think others won’t piggy back on them), but the 30-year bull market in bonds in general is now decisively OVER. It started with Corporate and Mortgage bonds, and now Treasury bonds are rolling over as well. Not to say that they can’t fight back, but the trend is now down, and as I said before this is probably the first time in our lifetimes that bonds are NOT rising in response to falling stock markets.
The reason I pen these missives is to help you protect yourselves. NOTHING positive has happened in the economy AT ALL in recent months, and don’t be fooled by stimulus packages, 200-point up days in the Dow (that was yesterday, now we’re down 200 today). Yes, markets can do all kinds of things, but the economic trend is down, and the process of hyperinflating ALL paper currencies is becoming exponential.
The below article further describes the trend I am talking about, in other words the trend toward GOLD (and silver) as the real safe havens, against everything from “deflation” to “inflation” to hyperinflation. It, too, suggests that gold is where the Chinese are moving to.
