Wednesday, February 15, 2012

Gold & Silver Receiving SAFE HAVEN CURRENCY Flows

Posting has been a little slow today as The Doc spent the morning interviewing a rather pivotal player in the silver market.  Check back as we should have the interview up in the next few days after we finish editing.

Silver's $34 cap remains in place, even with the big spike on the news that Germany has cold feet over the n th Greek bailout.  The cartel has had a firm $34 cap in place in silver for nearly a week now, keeping silver in a range trade from $32.50-$34.  Clearly $34 holds great significance for the cartel, as a clear break through $34 will send silver to test $35, and likely to a clear break out of its downtrend channel.  A range trade in the lower $30's is much more preferable to the cartel at this time.  This prevents major accumulation such as was seen as silver was smashed to $26, and also prevents the hedgies and the momentum traders from piling back into silver just yet. 

Live New York Silver Chart [ Kitco Inc. ]

3-Day Silver
Live 24 hours silver chart [ Kitco Inc. ]

After 11 separate beat-downs as gold neared or crossed $1750 last week, gold's $1750 cap has not even been tested this week, stuck in the $1715-$1730 range. 
Gold briefly vaulted out of this range and appeared ready to attack $1750 again just after 9am EST on the Greece news, but has seen nearly all of those gains lost over the past 2 hours. 

The action of gold and silver shooting higher on speculation that Greece could possibly default is extremely telling.  While we don't think there is much chance of an actual default as The Fed will hand Greece the entire 130 billion euros needed to last though March if Germany/the ECB doesn't in order to prevent a default and a CDS event, the fact that gold and silver vaulted higher indicate they are now receiving SAFE HAVEN CURRENCY flows.   This is a significant change from the 2008 crisis, when gold and silver sold off hard along with the markets, and the safe haven flows all went into cash and treasury bonds, causing 30 day t-bonds to go negative.   Clearly more are awakening to the fact that the US is Greece X 100, and the US' debt situation is as un-fixable as Greece's in the long-run, and PHYSICAL GOLD AND SILVER ARE THE ONLY REMAINING SAFE HAVEN ASSETS.   When the majority of hedge funds and large institutional investors realize this, it is GAME OVER for the cartel, and we are nearing that point.

Live New York Gold Chart [Kitco Inc.]

3-Day Gold
Live 24 hours gold chart [Kitco Inc.]