Graceland Updates 4am-7am
Jan 22, 2013
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A number of Western central bankers are issuing strong statements now, highlighting their concerns about actions just taken by the Bank of Japan (BOJ).
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The BOJ doubled their inflation target, to 2%, and announced they would begin open-ended QE in 2014. Of even greater importance, they announced the bank would begin a new era of coordinating policy with the Japanese government.
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Jens Weidmann, head of the German central bank, sounds particularly vocal, in condemning that cooperation. He believes the BOJ is risking a global fiat currency war, which is great news for gold investors!
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Some fund managers expressed disappointment that the BOJ didn't announce an immediate expansion of QE.
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I don't see that as an issue, because BOJ chief Masaaki Shirakawa's term ends in April. There are strong rumours that Japan's prime minister, Shinzo Abe, wants to replace Shirakawa with a "super-dove".
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If a super-dove assumes command of the BOJ in April, he may announce an earlier state date to "QE to infinity". I expect he will announce stunning yen-negative and gold-positive monetary policy, soon after his appointment is finalized.
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The April timeframe is becoming a key one for gold investors. It could mark the "official start" of a worldwide fiat currency war.
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Please click here now. "Queen" gold has arrived at significant minor trend HSR (horizontal support & resistance) in the $1700 area.
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The 14,7,7 Stochastics series I use on the daily chart is a little bit "up there" now. I'm a buyer at $1678 and $1665, and a seller at $1700, $1707, and $1725.
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A potential h&s bottom is in play now. A sharp sell-off soon could be just what the chart doctor ordered, to complete the right shoulder.
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Once inflation replaces deflation as the main financial theme, bond prices should fall hard, while gold soars. Unfortunately, until that inflation theme comes into play, gold will likely move higher when bond prices move higher, and lower when bonds fall.
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Please click here now. You are looking at a short term chart of the US T-bond. A small top pattern has formed. Gold is tracking the bond. While the bond could slip a little here, that would simply strengthen the technical position of gold, by helping create the right shoulder.
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I think a huge rally in bonds is coming soon, and it will be the fuel that gold needs, to challenge the strong HSR zone at $1800, and burst through it.
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The catalyst is likely to be a collapse in the stock market, or a horrible jobs report. The public is surging into the market now, eager to get all the free money that supposedly awaits them there, at much higher prices.Unfortunately, I don't think their stock market "expedition" is going end very well.
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Many technicians have highlighted topping action on the weekly bond chart, and I agree that it's there. The market is a fight, and there are usually powerful players on both sides of the trade.
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To view the weekly bond chart, please click here now. There is a h&s top pattern in play, and bonds have melted down, into HSR in the 142-143 area.
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Note the black HSR line I've highlighted at 136.44. If bonds were to decline further, I think the decline would stop there, and do so in the key April timeframe.
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I use the 14,3,3 series of Stochastics on weekly currency charts, to identify the start of bullish intermediate trend moves. This indicator tells me that bonds and gold are unlikely to decline much further from here.I don't think bonds or gold are going to decline much further, from here. I use the 14,3,3 series of Stochastics on weekly currency charts, to identify the start of bullish intermediate trend moves.
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I view both bonds and gold as de facto currencies. Currency trends tend to be longer than commodity or stock market trends.
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As a result, trend channels and oscillator crossovers tend to be more reliable, when they occur in these huge currency markets.
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Please click here now. That's the same weekly chart of the bond, and all the crossover buy signals of the key 14,3,3 Stochastics oscillator are highlighted.
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The only false signals occurred at the stock market lows of 2009, and a huge buy signal is in play, right now!
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Please click here now. That's the same weekly chart for gold. Gold is the ultimate currency, with the longest trends, so there are much fewer false signals generated by oscillator buy signals.
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You can see that after every buy signal generated by the 14,3,3 weekly chart Stochastics indicator, gold staged an enormous rally, and one such buy signal is in play right now. There may be a little backing and filling here, but the bottom line is that gold appears to be preparing to "head and shoulder" its way through the $1800 Maginot line in the sand!
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Cheers
St
