sinclair today - and gwb's package

  1. dub
    33,892 Posts.
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    If you go to the URL you'll be able to see the graphs - they won't show here.

    URL for this one is

    Chalk One Up For Custer
    But Don't Bet on The Blue Coats

    Everything Has A Price Tag

    I did an interview for South African radio yesterday and made a few points:

    * Gold is more about the Dollar than anything other single item.

    * The world does not orbit around the Sun of the Dollar, but because the IMF & BIS have been so successful in selling the Dollar Reserve Standard in the last twenty-two years, the Dollar is pivotal to gold.

    * Technically, the close of gold above $330 was infinitely more important than a close of the first US try of $354.40 in this phase of gold's bull market.

    Today we need to focus on the cost of things. As President Bush announced his economic stimulation package, comparisons were being made by the talking heads towards previous similar methods of economic stimulation, which were successful. There is however a key difference and that is the present economic environment of a Budget Deficit, a Balance of Trade Deficit, and a Current Account Deficit, all of which are presently trending toward larger, not smaller deficits. There is a definite cost to an economic stimulation program that will reduce government income and increase government spending possibly just at the wrong time.

    The wrong time is not only economic, but also geopolitical in the sense of the possibility, if not probability, that the US will invade Iraq. You have heard all the estimates for the cost of the Bush Economic Program, but let's focus for a moment on the potential of a war. Assuming the war is contained in one month, the cost of that campaign and the occupation of Iraq is estimated by reliable sources at a low of $121 Billion and a high of $1,595 Billion. Recognize that a Budget Deficit, Trade Deficit and Current Account Deficit can all be considered liabilities or a form of a cost. Further understand that all this actually has to be paid, not simply debited to Uncle Sam's American Express Card and you have quite a significant drag on the common share of the United States, the US Dollar. Therefore, gold will again challenge $354.50 and reach $372 as well as trading above $400.

    The US Dollar: USDX

    I would suggest we had some weak short cover today. I did not see any significant presence of the Exchange Stabilization Fund. It looks to me like a two day Head & Shoulders breakdown followed by a gap down and up to the neckline with a fall away at the close. Assuming it is sloppy tomorrow morning, we are on our way back to the 101.50.


    Well it rolled to the right yesterday and opened under significant pressure, yet gold did not look too shabby at the close. Keep in mind gold has the levels of $338, $343 and $348 on the way up as resistance, they now have become support. The close at $348.50 was positive as was the breakout and up from the power down trend line. This reaction in gold ends nothing and will not eat up much time.


    Humdinger for sure and frantic in its action. I suspect, like gold, the reaction in silver is short term.


    The Dollar, Gold & Silver markets right now are best understood by anyone with a ruler that read Edwards & Magee's chapter on trendlines. You get a ruler. You draw the PDT & PUT and you act according to the trend line and you will be king of the hill. Why complicate things? This is a Dufus Reaction.

    Note: There was a crowd of potential wager takers today on the gold price trading at $401 in 2003. I love the herd mentality. There were no takers on the up and the crowd arrives on the down. All of the potential takers wanted some derivation of the offer to benefit their side. No, I am not talking about a monthly average price of $401. Wagers do not come with stop losses and you have to have the $ on hand to make a wager.

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