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Why 95% of Traders Fail

Gold And Silver - Start Watching Fed's Fiat 'Dollar' More Closely For Clues

Commodities / Gold and Silver 2014 Mar 15, 2014 - 12:31 PM GMT

By: Michael_Noonan

Commodities

Saturday The Ides of March 2014

For the past several weeks, our commentaries have dwelled on factors unrelated to what so many other writers have focused, primarily demand from a variety of sources, shrinking supply of physical at COMEX and LBMA, lots of charts and graphs to make interesting presentations, but none of those factors have been instrumental in moving gold and silver to higher levels. Our take has been the suppression of gold and silver has come from the elites running the central banks, and by extension, all Western governments.


There are battles being waged deep behind the scenes, not being made public, but visible based on developing world affairs, if one wants to connect dots without concrete proof. Ukraine is the latest prime example. The Western central banks are attacking Russia in desperation to protect failing energy sources and survival of the even faster failing Federal Reserve Note, more commonly accepted by a different name, the "dollar."

It appears Cyprus was more of an attempt to freeze or capture Russian deposits from its gas/energy revenues. It was primarily the Cypriots who suffered, for little to none of the Russian deposits were confiscated. Ukraine is another front, pushed by the elites through their operative agents to stir up unrest and attempt to have Ukraine join the EU, even though Ukraine would suffer financially. The West is trying to prevent Russia from having easy access to its gas pipelines sending energy west to Europe.

The US recently released some of its oil reserves onto the market, causing a sharp drop in oil prices. Ostensibly, the action was to test supply channels, etc, but in reality, the elites are doing what they can to prevent Russia from reaching the $110 per barrel it needs to maintain its economy. This is aggressive oil warfare, and it is surely doomed to fail, just like every other clumsy Western attempt to try an maintain its flagging supremacy.

The amount of Treasury bonds Russia holds, and China has an even greater amount, can be used to cause more dramatic harm to the US than the US could ever hope to damage Russian influence. Case in point is the chart from the Federal Reserve that shows how foreign-held bonds are being "cashed in."

There was an increase to $104.5 billion in Treasury sales from foreign sources, [wonder who could be selling?], when the average weekly weekly sales are $46.6 billion. Someone is sending a very strong message to the US that undermines the fiat "dollar." In the larger scheme of things, this is a real shot across the bow, and more of this kind of action will be taking place in the future.


An interesting question is, who did the buying? The Fed, of course, even though it may try to divert the purchases elsewhere, like it did in Belgium, recently. There is also the more likely circumstance that the Fed took in the bonds, [it had to], but kept them off the books. The bonds do not have to be paid until maturity, so the Fed postpones having to put up any more digital fiat,and as to interest, it does not have to pay any to itself.

This is how the "vaunted" Fed operates, more like taking pages from Zimbabwe's play book ... print, print, print. Obama, the Fed, and the elites need a way to cover their paper asses being pressed to the mat. What gets lost in all of this is gold.

Gold and its control is the undercurrent behind everything that goes on. Control has been, and continues to be lost by the Western central bankers. What few people know, and what even fewer people are capable of grasping, is the extent to which the elites control every aspect of life in the Western world. Certainly they control all of the money. They also control world drug trade. [Ever wonder why the US is really in Afghanistan?] They control all corporations. They own every stock traded on the NYSE. Every aspect of the media, print, television, radio is under their control. The medical profession and pharmaceutical industry, education, travel, all forms of government, all controlled.

One thing that has not changed is the Golden Rule. He who holds the gold rules. The transition of physical gold from West to East is disrupting the elites domination of the entire financial world. The East has been saying, "Enough is enough." What no one knows is how this will all unfold.

One thing is certain: America has become a Third World country, liberty lost, economy failing, joblessness growing, homelessness growing, children as bad off, some worse than in recognized Third World countries, increasing dependence of the population on federal assistance, a growing police state, the NSA destroying all privacy, maybe even the internet. Life is about to get much worse in the United States.

We have been advocating the purchase of physical gold and silver, at any price, for well over a year. Smart people have been doing exactly that. Those less certain have been concerned about the lower prices for their holdings of gold and silver, which totally misses the point. If your house drops in value, are you going to sell it? Stay focused and remain committed to the ongoing accumulation of the physical PMs. Stay on the side of history with a proven record of wealth preservation through the ownership of gold and silver.

Changes are coming, and the momentum will grow to the point of being irreversibly up in the direction of gold and silver. In the process, there will be destruction of all paper assets and increased panicky government controls to steal whatever it can from people. FDR did it in 1933 when the elites had him trick the public into turning in their gold, even though no one was lawfully obligated to do so.

Never lose sight of the fact that there is a huge difference between your country and the government that runs it. Governments that run countries ruin them, and the corporate federal government does not have the people's best interest in mind, at all.

Back to gold and silver. Those who own physical gold and silver are doing the right thing and positioning themselves to at least have more choices as the corrupt federal government continues along its path of financial destruction. Just keep buying, when and as one can, and never let go of them from a lack of confidence.

There may be opportunities developing in the futures markets for gold and silver, at least for as long as the exchanges remain viable, and that, too, will change.

A key to watch more closely is the fiat "dollar." It seems to be weakening, and that is the unyielding intent from China, Russia, parts of the Middle East, remaining BRICS nations, and eventually even turncoat partners like Great Britain and Germany. The latter two are not going to allow themselves to be sucked into the fiat paper vortex in which the US is inexorably heading.

The last two swing high rallies failed to reach a 50% retracement, a general sign of weakness. Price is near important support. The more times support is retested, the more likely it will eventually break. The daily shows that possibility somewhat more.

It should be added, that even if 79 - 79.50 breaks, there is still important potential support at 78.



The current developing market activity is different from when price was at this level in late October 2013. The ranges at the low were smaller, and the ensuing rally was strong and fast. Currently, the ranges are larger, the closes generally weaker. Breaking the 79 area should propel gold to higher price levels, possibly challenging the 1450 area.

Something has been going on with gold as it refuses to break even for a "normal" type of correction lasting 1 to 4 days. Given how gold has previously been "beaten" down, almost with impunity, it was hard to trust the rallies, especially as price approached what looked like potential levels of resistance.

Bearish spacing still looms, but as gold continues to build a base, it is just a matter of time before it disappears.



What looked like potentially strong resistance at the 1360 area turned out to be a mirage as price sliced right through. Friday's mid-range close is also a function of the lower price "fix" close, as gold had been trading a few dollars higher. In futures, fixes are everywhere.

A correction in up trends is normal, usually lasting 1 to 4 days. A logical support for any correction would be the 1355 - 1360 level.



Relative to gold, silver was operating in a different realm. Its development has always been more compact than gold since the highs. While silver did not participate in any strong rally over the last few weeks, it is still developing in a positive way.



There is the possibility that silver may not retest 20.50, again, but wherever the next reaction takes it, if it develops in a way that shows buying potential, it may be well worth taking a long position in futures.


By Michael Noonan

http://edgetraderplus.com

Michael Noonan, mn@edgetraderplus.com, is a Chicago-based trader with over 30 years in the business. His sole approach to analysis is derived from developing market pattern behavior, found in the form of Price, Volume, and Time, and it is generated from the best source possible, the market itself.

© 2014 Copyright Michael Noonan - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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