There is one thing that can rock the flow of money into risk assets, that makes the markets a little nervous.
Its called elections. Greek and French elections are due during March and April 2012. We are currently working through Greek issues, then there's the French election. We all know the French president Sarkozy and Germany Chancellor Merkel have work very well together to print money to further kick EU debt crisis down the road. If Sarkozy loses in April, and Holland wins (who is leading in the poles 60/40) then Merkel (and Germany) is on her own. The song for Germany will be:
The Clash: Should I stay or should I go ! The Merkel lover affair with the Eurozone could be over.
Greece has secured a second bail out package. However if you really expect Greece to heal to German demands and do what they ask, yeah right. They didnt after the 1st bailout, they wont after the 2nd. The Greeks got free cash before the exit the euro, thanks Merkel (Ha)!
The German voters will find favor with the latter choice of either bailing out Portugal, Spain and Greece compared to bailing out their own banks if they leave the Euro (and subsequent recession that would follow), and Merkel knows this and its much cheaper. And YES it is on the cards, German legislation is in place, the German market crash funds have been re established. And YES you will be the last to here about it, the insiders will make a killing.
The above scenario is the buy under the US dollar and the sell in gold. This is why portfolio managers sold gold hard at $1900, they saw the above within Merkel's playbook, The next few months should decide all.
Risk assets should muddle sideways to down until the above scenario is decided.
Previous post: Gold Gann Angle and Cycle review
Gold Gann Chart
- Bull trend has yet to be confirmed
- Sideways action expected at the very least
Gold Cycle and Wyckoff Chart
- BC: Buying climax, AR: Automatic rally, SOS: Sign of Strength
- The bulls turned up on time, how cycles are peaking, we expect the bulls to allow price to fall back a little to allow more accumulation.
- Subject to Merkel playbook of course.