Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
The AI Mega-trend Stocks Investing - When to Sell? - 28th May 20
Trump vs. Biden: What’s at Stake for Precious Metals Investors? - 28th May 20
Stocks: What to Make of the Day-Trading Frenzy - 28th May 20
Why You’ll Never Get Another Stimulus Check - 28th May 20
Implications for Gold – 2007-9 Great Recession vs. 2020 Coronavirus Crisis - 28th May 20
Ray Dalio Suggests USA Is Entering A Period Of Economic Decline And New World Order - 28th May 20
Europe’s Coronavirus Pandemic Dilemma - 28th May 20
I Can't Pay My Payday Loans What Will Happen - 28th May 20
Predictive Modeling Suggests US Stock Markets 12% Over Valued - 27th May 20
Why Stocks Bear Market Rallies Are So Tricky - 27th May 20
Precious Metals Hit Resistance - 27th May 20
Crude Oil Cuts Get Another Saudi Boost as Oil Demand Begins to Show Signs of Life - 27th May 20
Where the Markets are heading after COVID-19? - 27th May 20
Silver Springboards Higher – What’s Next? - 26th May 20
Stock Market Key Resistance Breakout Is Where the Rubber Meets the Road - 26th May 20
5 Ways To Amp Up Your CFD Trading Today - 26th May 20
The Anatomy of a Gold Stock Bull Market - 26th May 20
Stock Market Critical Price Level Could Soon Prompt A Big Move - 25th May 20
Will Powell Decouple Gold from the Stock Market? - 25th May 20
How Muslims Celebrated EID in Lockdown Britain 2020 - UK - 25th May 20
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20
China’s ‘Two Sessions’ herald Rebound of Economy - 22nd May 20
Signs Of Long Term Devaluation US Real Estate - 22nd May 20
Reading the Tea Leaves of Gold’s Upcoming Move - 22nd May 20
Gold, Silver, Mining Stocks Teeter On The Brink Of A Breakout - 21st May 20
Another Bank Bailout Under Cover of a Virus - 21st May 20
Do No Credit Check Loans Online Instant Approval Options Actually Exist? - 21st May 20
An Eye-Opening Perspective: Emerging Markets and Epidemics - 21st May 20
US Housing Market Covid-19 Crisis - 21st May 20
The Coronavirus Just Hit the “Fast-Forward” Button on These Three Industries - 21st May 20
AMD Zen 3 Ryzen 9 4950x Intel Destroying 24 core 48 thread Processor? - 21st May 20
Dow Stock Market Trend Analysis and Forecast - 20th May 20
The Credit Markets Gave Their Nod to the S&P 500 Upswing - 20th May 20
Where to get proper HGH treatment in USA - 20th May 20
Silver Is Ensured A Prosperous 2020 Thanks To The Fed - 20th May 20
It’s Not Only Palladium That You Better Listen To - 20th May 20
DJIA Stock Market Technical Trend Analysis - 19th May 20
US Real Estate Showing Signs Of Covid19 Collateral Damage - 19th May 20
Gold Stocks Fundamental Indicators - 19th May 20
Why This Wave is Usually a Market Downturn's Most Wicked - 19th May 20
Gold Mining Stocks Flip from Losses to 5x Leveraged Gains! - 19th May 20
Silver Price Begins To Accelerate Higher Faster Than Gold - 19th May 20
Gold Will Soar Soon; World Now Faces 'Monetary Armageddon' - 19th May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

Another Gold Attack, then North to $2,000!

Commodities / Gold & Silver Jun 23, 2008 - 07:03 AM GMT

By: Alex_Wallenwein

Commodities Best Financial Markets Analysis ArticleOrdinarily, gold would be right before a major breakout point at this time, which should occur this week or the following week at the latest – but Wall Street and the entire US financial structure are so near a complete breakdown that another attack on gold must be expected. Here are the reasons why:


The Dow

The Dow closed on Friday only a hundred points above its year 2000 high and March 2008 low of 11750. That point is so critical that "the powers" are in no position to allow it to be breached while gold is heading north. If that level is breached, non-PM investor psychology will seriously turn back onto itself and eat its own lunch.

There are two additional support levels on the way back down to the 2002 lows near Dow 7000, and those lie at 10,700 and 9,700 or so, respectively. With investor psychology as bad as it is now, a breach of the 11,750-level would kick the legs out from under whatever investor confidence remains so that the Dow will crash through these two additional supports at near free-fall speed.

The Dollar

The dollar has suffered severely from Tricky Trichet's hammer blow. The FOMC meets again this coming Wednesday. They have nothing to offer in support of the greenback - except for talk, that is. Expect that talk to begin early Monday morning, maybe even during overseas trading hours so the powers don't have to fight a dollar-decline and gold spike that has already developed momentum.

With the Dow teetering on the precipice, Bernie can't bump the federal funds rate now. He can only "hint" that he will do so going forward in order to give the dollar a bump so that the coming trashing of gold will look more plausible to the public. He cannot do a repeat-performance of what happened in March this year and drastically lower rates to give the Dow support. That would make gold spike sky-high, while offering only questionable results for the Dow.

Precious Metals Stocks

Telling, here, is that the PM stock indexes haven't followed their non-PM brethren into the danger zone. The XAU has formed a near-perfect diamond, and even the recently laggard HUI is finding nice support. These indexes will break out alongside gold after gold has recovered from the coming assault.

Gold & Silver

Gold is forming a beautiful triangle pattern from which it will probably break out by July 4th, or shortly thereafter.

That is, if we don't get a "false flag" here in the US from the frantic and now ultimately frightened powers. There is a lot of static going around that a major "hit" is in the offing, precisely during the July 4th celebrations in order to drive Americans back into their cage of fear and make them support a US/israeli strike on Iran. If any of that happens, of course, all forecasts about anything economic will be off the table.

US Banks - Deep in Hock!

The stock index for US Banks is about to plow through its own nine-year support level, as can be seen from the chart below, and that is probably the biggest argument for yet another preemptive hit on gold.

Once the BKX rams its head through that floor around 60 or so on the index' scale, there is nothing technical to stop its fall until the 1995 bottom near 30. In other words, Since a little over a year ago, that index has literally halved its value. It could easily halve its current value again within a month according to its most recent plunge into the abyss.

Since today's governments are run from behind closed boardroom doors of the world's top banks', and since most of those banks are of United States' origins, a further catastrophic decline in their market caps cannot be tolerated from their point of view. It would mean that the only way form them to raise needed capital would be to run to other country's sovereign wealth funds – which some notable ones have already done, of course.

A very un-encouraging picture emerges when one looks at the US banking system's net reserve position . Remember that banks are supposed to have "cash reserves" of a certain size before they are allowed to lend to the public, and lending to the public is how they quite literally make money. This is what the US banking systems' reserves have done in 2008, so far:

When banks can lend enough money, they can "make" enough to stay solvent in that kind of a net-borrowed reserve position. But now, they are forced to tighten lending standards and long term rates are going higher regardless of what the Fed does, so at this time of a historic explosion of borrowed reserves, their ability to stay solvent is well, er ... rapidly dissolving, you might say.

The US banking sector will soon go through a series of high-profile bailouts, consolidations, and eventually bankruptcies. Whoever comes out on top at the end of this meltdown can safely be assumed to have had its fingers deep in the engineering phase of it. Goldman Sachs is high on the list of those most likely to survive. Say "hi" to your future masters!

The ludicrous part is that not that the entire US banking sector as a whole is hopelessly in the red, it's that it is even legal for these "institutions of higher lending" to be in a net-borrowed position when it comes to their so-called "cash reserves". That shows where the real political power is in the world. If you have an industry lobby that is powerful enough to get elected lawmakers to legalize their plainly and obviously wealth-destroying behavior, you have the power to run the country itself. Unfortunately, in the case of the US banking cartel, they are only running this country into the ground.

In the end, if there will be no "false flag" attack inside the US, and if no martial law or its equivalent is going to be imposed here as many fear at this point, gold will take its short-term lumps this week and will then start its run north to the $1,500 - $2,000 range before the year is up. Why $2,000? Just because it's a nice, round number. That doesn't mean it will stop there. Even Goldman won't be able to do anything about that.

As time goes on, the powers' continued ability to delay this process is coming more and more into question. The above chart from the St. Louis Fed shows why. That's why the Fed wants total regulatory power over the entire financial system of the US. More control means even more ability to hide and obfuscate. The very need for such increased power shows how atrocious a shape the US financial system is really in.

Got gold?

Alex Wallenwein
Editor, Publisher
The EURO VS DOLLAR MONITOR

Copyright © 2008 Alex Wallenwein - All Rights Reserved

Alex holds a B.A. degree in Economics and a juris doctorate in Law. His forte is research. In late 1996, he began to research how money is used by some to exert political and economic control over others' lives. In the process, he discovered that gold (along with silver) is the common man's antidote to this effort. In writing and publishing the Euro vs Dollar Monitor, he explains the dynamics of this process and how individuals can harness the power of gold in their efforts to regain their political and financial autonomy.

Just like driving your car, investing only makes sense if you can see where you are going. The Euro vs Dollar Monitor is the golden windshield wiper that removes the media's greasy film of financial misinformation from your investment outlook. Don't drive your investment vehicle without it!

Alex Wallenwein Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Pieter van der Westhuyzen
23 Jun 08, 11:55
Gold price

Very interesting article and I like the idea! Good analyses and enjoy the website and the articles. Guess the gold break-out will happen as it is in a flag pattern and break-out is imminent, but the wave principle suggest a move to $1250 (about). Ultimately might be $2000 but cannot determine this yet form the current trend and technical analyses.

Regards,


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules