There has been a ton of work done by GATA.org (and others) with regards to exposing the ongoing manipulation and fraud that is ever present in the gold market(s). They have managed to turn fringe conspiracies and rumors about price manipulation and suppression into mainstream issues that can move markets. At the recent CFTC hearings, GATA, with the help of Andrew McGuire, helped bring to light some of the most damning accusations against the LBMA I have ever heard. I think traders have begun to digest this information, and only now are we starting to see what I believe are the effects of these claims on the gold futures market.

Gold 2000-2010

Unfortunately, I do not have a way to generate charts for gold futures in my charting application, so further below I will be using the GLD fractional-reserve ETF as a charting-proxy for where I think the price of gold is headed since GLD does a good job of tracking the relative price of gold.

As evidenced by the recent bullish price action, it appears that gold is poised for a breakout over $1,200.00 With the recent accusations about insider trading, the 100:1 leveraged paper market at the LBMA, the manipulation of the futures contracts by the large bullion banks, the supposed empty bullion vaults at ScotiaMocatta, the concentrated short positions by only a handful of banks, and the fact that central banks around the world are net-buyers of physical gold, I believe we are left with very little room for extreme downward pricing pressure. To be honest with you, my gut instinct tells me that we will never see gold below $900.00 for quite some time.

There are many times when the studies drawn on a chart reveal stunning patterns that would otherwise go unnoticed. It is precisely these times when I like to sit back and ponder the big technical picture.

2010 Gold Analysis

In this case, we see that gold is trading within a very specific Fibonacci pattern that assumes an upper limit trajectory of $1500.00 per ounce of shiny yellow metal. The premise here is simple: I believe we will see a melt up in the price of gold over the next few years due to, among other things, the various fundamental catalysts I mentioned earlier. I believe that the melt-up will occur along this Fibonacci retracement pattern; first testing $1,200 in the near term, and anywhere between $1250-1500 in the intermediate term (2-3 years).

A move from $1,200 to $1,300 is a modest gain of only 8.33% and easily possible.

$1,200 to $1,400 is a nice gain of 17% and is also quite achievable.

$1,200.00 to $1,500.00 is a gain of 25.0% and I don’t think it is unrealistic to see this new high in the next few years

Andrew Maguire & Adrian Douglas: Discuss What Could Be the Largest Fraud in History

via King World News:

Andrew is an independent metals trader turned whistleblower at the center of a storm for exposing what could be the largest fraud in history involving countries, banks and government leaders. Adrian Douglas Board of Director from GATA, the man who Andrew reached out to joins in this interview where they discuss a fraud so extraordinary and so unimaginable that it is the kind of thing that only happens in hollywood thrillers. They also discuss the CFTC sponsored meeting on metals which was an unmitigated disaster because it additionally exposed the fraud on a grander scale.

Click Here To Listen to the Interview

“The bond market is the backbone of the US Ponzi Finance system. When it goes – and the day is not far in my opinion – the whole enchilada will come crashing down. Any type of financial asset that has a counterparty – which is pretty much all the paper assets in the world – bonds, futures, any and all derivatives and yes, even the paper currency – will crash. What will they crash against? Yes, that’s right – Gold.

All the world’s capital – trillions, perhaps quadrillions of it – will come rushing into the very tiny physical (NOT paper) Gold market. Remember, the world’s real physical capital – real assets such as land, oil-refineries, mines, infrastructure, etc. will not vanish, only it will be re-priced in terms of Gold and its ownership transferred to those who hold it. Since everything stays on this planet, it is a zero-sum game and the winner will be Gold. In other words, an ounce of physical Gold will command a lot more in real purchasing power than it does today. Just like a national currency is a claim on goods and assets within that country, Gold will be a claim on global goods and assets worldwide.”

According to Jesse @ Cafe Americain:

…to my knowledge no private corporation has the right to engage in contracts that encumber the US gold reserves, not the Fed nor the Banks, and not even the President or Treasury alone. Only the Congress, with the knowledge of the people, may allocate and distribute such a sovereign asset. If swaps and contracts and leases are being made on the US gold reserves, the people then are the subjects of a monumental theft and fraud. And if the US is writing or guaranteeing CDS in gold, then most likely it is doing so as a means of rescuing those who have already gone hopelessly short the gold market, and need to arrange a ‘back-door’ bailout.

American Silver Eagle Bullion Coin

I just received a special offer from Apmex.com for a ‘weekend only’ sale of American Eagle gold and silver coins. The premiums are absurd. See for yourself:

• 2010 1 oz. Silver American Eagles – just $2.49 per ounce over spot
• 2009 1/10 oz. Gold American Eagles – just $14.95 per coin over spot
• 2009 1/4 oz. Gold American Eagles – just $24.95 per coin over spot
• 2009 1/2 oz. Gold American Eagles – just $34.95 per coin over spot
• 2010 1 oz. Gold American Eagles – just $49.95 per ounce over spot

Silver is trading at $17.39

With a markup of just $2.49 … 1 oz. American silver eagles are selling at a 14.31% premium to spot!!

Silver would have to reach $19.88 / oz. just to break even!!

I have to believe that demand for physical bullion is outrageous right now, especially for Apmex to go around and offer this as a sale price. Gold, on the other hand, is trading at $1135.40 With a $49.95 markup, you are looking at a 4.3% premium. This is definitely a better deal, although the spread is still a bit wide.

I noticed that gold and the sp500 are at parity today…and that got me thinking. If one happened to go long gold and short the SP500 a few years back, what would your situation be like today. Not surprisingly, you would be up 100% on your investment. Have a look at the chart, get familiar with the pattern, and pull up a chair.

Long Gold, Short S&P500

As you can plainly see, we’re in a consolidation pattern right now. Volatility is EXTREMELY low, and the chance for a gut-wrenching move in either direction is entirely possible. If you believe that things are getting better, and that prosperity is on the way, then maybe you should go long the SP500 and short gold. However, if you think we’re in for a rocky road ahead, you may want to do the opposite and get long gold and short the crap out of the SP500. As much as I despise the GLD ETF, it’s still a trading vehicle that (somewhat) tracks the price of gold enough to make it useful. At this point you can enter a neutral trade (50% upside risk, 50% downside risk) by purchasing one share of GLD and shorting one share of SPY. Depending on your risk tolerance, and your preference, you can give yourself a bias in either direction by modifying your ratio of shares long vs. shares short. Since each share is trading at roughly the same price, this is an easy trade to tweak in your favor as the trend becomes more apparent. Maybe you don’t like the SP500 and you want to short your country’s index of choice. Be my guest, the charts more or less look the same (except for Japan…the mother of all carry trades)! Don’t believe me? See for yourself:

Long Gold Short India

Long Gold Short China

Long Gold Short Korea

Long Gold Short Malaysia

Long Gold Short Singapore

Long Gold Short Taiwan

Long Gold Short France

Long Gold Short Germany

Long Gold Short The Queen

Long Gold Short Japan

Gold Bars

FOFOA

Why would you ever invest in the GLD etf when it has this written in its prospectus:

Gold bars allocated to the Trust in connection with the creation of a Basket may not meet the London Good Delivery Standards and, if a Basket is issued against such gold, the Trust may suffer a loss. Neither the Trustee nor the Custodian independently confirms the fineness of the gold bars allocated to the Trust in connection with the creation of a Basket. The gold bars allocated to the Trust by the Custodian may be different from the reported fineness or weight required by the LBMA’s standards for gold bars delivered in settlement of a gold trade, or the London Good Delivery Standards, the standards required by the Trust. If the Trustee nevertheless issues a Basket against such gold, and if the Custodian fails to satisfy its obligation to credit the Trust the amount of any deficiency, the Trust may suffer a loss.

This sounds like fraud to me.

I almost choked on my drink when I read this. I could not believe that this guy is out there pulling the same stunt in front of the same people yet again. Honestly, how dumb do these bankers have to be to believe this guy?

If I were Japan or China I’d be clamoring to get out of my dollar holdings as quickly as possible. This charade has been going on long enough, but I guess the Japanese and the Chinese take Tim Geithner’s words at face value:

TOKYO — U.S. Treasury Secretary Timothy Geithner said Wednesday that maintaining a strong dollar is “very important” for the country’s economy, sticking to his mantra on foreign-exchange policy as the U.S. currency continues its broad downtrend.

“I believe deeply that it’s very important for the U.S. and the economic health of the U.S. that we maintain a strong dollar,” he said at a roundtable discussion with Japanese reporters. “We bear special responsibility for trying to make sure that we are implementing policy in the U.S. that will sustain confidence not just among American investors and .. savers but investors around the world” that the U.S. will fix its budgetary problems as its economy improves.

One word for you: BULLSHIT!

Take a look at this point and figure chart of the US Dollar Index. I have annotated it so that the Japanese and Chinese bankers can better understand the meaning of Mr. Geithner’s rhetoric:

Strong Dollar Policy

As you can plainly see, it’s backwards day at the treasury…every single day. It’s no wonder there is so much chatter about creating a new reserve currency. On top of that, it’s no wonder gold is currently trading at $1,121.00 Just take a look at this annotated gold chart as well:

2009 Gold Price Chart

It’s also no surprise that countries such as India and China are buying gold like it’s going out of style. I think India’s reasons for buying gold have more to do with the fact that the India SBI Prime (Prime lending rate of the State Bank of India) is up around 11.750% and less about diversifying reserves, however, this is merely conjecture.

I have written about our now infamous “Strong Dollar Policy” before. Additionally, I have written about the Global Experiment in Zero Interest Rate Policy that we are currently living through. Not only that, but I have also written about the Death of The Dollar. All of these pieces of the puzzle are intertwined.

If things keep up the way they are going, our dollar may look something like this:

Zimbabwe $100 Trillion Note

Lucky for you, I have saved the best for last: Tim Geithner’s comments are quite hilarious towards the end of the WSJ article. I will first present you with the his quote, and then I will translate it so the Chinese and Japanese bankers can understand it:

“I don’t want to say more than what I’ve said in the past, which is that China has laid out this very broad direction of reforms’ to invigorate domestic demand, Mr. Geithner said. “It’s a very complicated mix of policy changes. As part of that, they’ve recognized that it’s in their interest over time to move to a move flexible .. exchange rate.”

Those reforms being undertaken by China “take time,” he said.

What Tim Geithner is really saying goes something like this:

“I’m going to keep my mouth shut about how screwed the US Dollar happens to be. If anyone asks I’ll just reply with ‘strong dollar policy’. If I say it enough maybe they will believe me. On top of that, China has been kind enough to tell us that they are going to systematically destroy our economy. Since the Chinese have agreed to do this slowly, this gives us the opportunity to feel the pain over what could possibly amount to many long years.”

It doesn’t take a rocket scientist, or a village idiot central banker to realize that the price of gold has been in a decent uptrend over the last 3 years. In this simple price chart I like to use a 100-period exponential moving average (blue) and a 200-period EMA. This gives me a nice “cut the bullshit” price/trend picture without really having to think too much. Considering the slope of the uptrend from bottom-left to top-right…if the trend were to continue (excluding dips and the like), I would estimate that 1,200.00 Federal Reserve Tickets (FRT’s…pronounced “farts”) will buy you an ounce of gold. Perhaps you’re like me and need a little bit more convincing, no?

3-Year Gold Chart

Well then, my fair weather financial friends, have a gander at the second chart:

Gold Support and Resistance

Some people would have you believe that technical analysis is pure bullshit. I would like you to believe that it is complete and utter bullshit AND extremely useful! So, what did we do to this chart compared to the last one you ask? Not a hell of a whole lot. The first thing I did was change the price plot from candlesticks to dots which aids in elminating some of the jagged noise. Secondly, I took on a high-level study in support and resistance. Basically, I draw a few lines on the chart and all of a sudden I can say with definitive authority that there are certain places gold has been, and certain places gold could be (assuming things play out the way I want them to).

On a three year chart of Gold, drawing support and resistance lines will provide you with a very broad idea of where buyers step in to the market and sellers step out of the market. Over the last three years, Gold has found strong support at $700.00 per ounce and extremely fierce resistance at $1,000.00 per ounce. As a testament to the self-fulfilling prophecy that is technical analysis, you can see that old resistance (Feb ’07, May ’07) became new support (Nov ’08) and whenever gold decides to wise up and take off past $1,000.00 we will see this price-point become new support. Intermediate-term risks in the gold trade come into play around $850.00 an ounce. If one were to witness a breakdown in price at that level, there’s nothing to hold the price up until the $700.00 support-level.

Now lets move on to the third chart to answer the question of when this goldgasm is going to manifest itself…

Golden Triangle

To put it simply, I give it about 8-12 months. Just draw the bottom line out to the right until it intersects the top line. If the price of gold doesn’t take off by then, it will eventually collapse. See, this Technical Analysis stuff is easy! This is the type of chart that makes Technical Analysis out to be the voodoo that it really is. The fact of the matter is that I cannot predict how our fearless leaders of finance and government will interfere with this price pattern. I cannot control the price of gold at all. I can only hope that my predictions come to fruition and that the shorts lose their asses by being on the wrong side of this trade.

So why do I think the goldgasm is going to capitulate in the next year or so? Well…you simply cannot print your way out of any kind of catastrophe. History has demonstrated this point many times. Fiat money never lasts. The dollar is nothing more than a paper promise backed by the full faith and credit of the US Government. Eventually people will wise up and realize that the theater is on fire, the doors are locked, and everyone is scrambling to get out of the single open door in a dark corner. When they stampede towards the exit (sell dollars frantically), the “price” of gold will skyrocket.

For the interest of disclosure, and if your’e a complete and utter moron and couldn’t figure out what side of the trade I’m on: I’m long gold.

This book is aptly subtitled “The Battle Against Sound Money As Seen From A Swiss Perspective”. Gold Wars serves as a chronicle of history from a rather unique and eye-opening perspective. The author, Ferdinand Lips, begins by discussing the history of civilization and the use of gold as money. One of the key points that the author makes is that almost every great society began their decline when gold money was thrown by the wayside. Lips does a good job of correlating the deviation from sound money (gold) and the downfall of great societies.

Here is fame.org’s description of the book:

“Gold Wars deals with gold’s history, the gold rushes and the abandonment of gold-as-money under the modern welfare/warfare state. It shows how governments, fearing the affinity of free people for gold, fight it, thereby helping to destroy whole countries along with the gold mining industry. The book highlights the betrayal of gold-rich Switzerland. The author condemns gold “hedging,” gold market manipulation by governments and bullion banks, fiat money and debt. He concludes that only a gold standard can return an ailing world economy to its full potential, reduce unemployment, help restore law and order, and help to secure peace and freedom for mankind.”

The book is a priceless chronicle of history through the eyes of a sound-money advocate. Although it was written in 2001, there are important lessons that one can apply to our current financial situation. For example, the author explains the scam known as the International Monetary Fund (IMF) and their fanciful Special Drawing Rights (SDR’s). He also explains how the excuse of selling IMF gold to benefit the poorest nations on earth is really a way of keeping them in perpetual debt. The author builds a logical case against the IMF and goes on to say that the IMF sells gold to suppress the price (of gold) and generate cash for loans to poor countries. These countries happen to be gold producers, and as such, they are consequentially hurt by the inability to realize higher prices on their chief export (gold). As you read through the pages you will find yourself wondering why we allowed the banking cartels to thrive. You will ask yourself why this book isn’t required reading in schools, and you will find yourself scrambling to buy gold. This book sheds light on the necessity of sound money. It drives home the lesson that “gold is nobody’s liability,” and if you have ever considered buying gold, this book is for you.

http://www.fame.org/goldwars.htm

Gold Prices From 30 days to 10 years

We now have six uptrends across varying timeframes ranging from 10 years to 30 days. If you’re a daytrader, the trend is your friend. If you’re a swing trader, the trend is your friend. If you’re an investor, the trend is your friend. Make no mistake about it folks, the gold uptrend is long and strong. Some might ask “but what about the potential double-top evident in the five and ten year charts?” My response to that question is as follows: If you are too scared to jump in here, and think we’re going lower, wait for support at $700.00 conversely, if you have balls of steel and think we’re headed for the most disgusting bout of inflation the United States has ever seen, you jump in balls deep and buy gold.

Disclosure: Long Gold for the long term

Gold Chart 04/28/2009

In 2006/2007 we saw a very pronounced isosceles triangle form as price action went from $700 to $550 then up and down and all around until it finally broke out in September 2007. Now fast-forward to March/April 2008. The price of gold has peaked out at a cool $1000.00 an ounce (Major Unconfirmed Resistance). Now the descent begins. The price seesaws all the way down to the $720 level by December (Major Confirmed Support). In roughly three months after the decline, the price of gold skyrockets back up to $1000 and subsequently hits (and confirms) the major resistance which exists at that price level.

So here we are, it’s the end of April 2009 and where is gold supposed to go? It’s currently dicking around at $893 per ounce which is pretty close to the 200-day moving average of $874 an ounce. If you’re a bull, you see a developing inverse head-and-shoulders pattern with a neckline at $850 per ounce. If you’re a bear, you see something reminiscent of a double-top coupled with a broadening wedge sort-of-thing. Hell, I don’t even think there’s a name for it but it’s potentially dangerous.

If you are a bull, you want to see gold hit $850 an ounce and then proceed to rebound up to $1000 before bouncing around in that channel for a while and then proceeding to sharply break out above the $1000 resistance. Once the rocket takes off, there’s no telling where it could go, but the sky is the limit. Conversely, if you’re a bear, you want to see gold test, and fail at $850. If this happens, gold should rapidly approach major support at $720 per ounce before settling down a bit.

So here I am, wanting to buy a gold eagle with the intentions of starting a collection of gold bullion merely because I want to, but I just can’t quite decide if I’m a bull or a bear yet. If I decide to be a bull, I want to buy bullion at or near the $850 level. If I’m a bear, I’ll wait until we confirm support again around $725.00