Gold Spikes Down to $1650 on Multiple Signals

By Tom Luongo in Gold and Oil News | December 20, 2012 16:25 | Tags: , , , , ,

I’m watching the gold market right now and $1650 has been reached this morning.  There is still nearly two full sessions until options expiration tomorrow so this current downdraft has a lot of potential for a major wipe out.  If you are long gold with leverage you are an idiot.  Jim Sinclair has been telling you this for years and yet you think you can outsmart those with billions and all of the power?  What do I think is happening?  Do you care?  Here it is:

  • Gold has been inversely trading against the Euro since the Presidential election.  Money is being repatriated back to the Euro after the massive outflows from earlier this year.  Huge liquidations are happening there
  • Those that bought the dip to the $1500’s are sitting on huge capital gains that the fiscal cliff threatens to tax into oblivion — selling pressure there.
  • QE 4’s unsterilized bond-buying program is not enough to stave off the effects of the fiscal cliff in the minds of bond traders — TIPS yields have risen sharply since the QE4 announcement.  Gold rises and falls on inflation expectations
  • Options expiration is tomorrow and any opportunity to punish longs out of this market that will rise sharply in 2013 will be taken by the sociopaths running the markets.

If you have money on the sidelines and you are interested now would be a good time to buy gold.  It’s not like the demand is not there in the physical market.  It is.  The futures market is simply a mess right now.

About Tom Luongo
Tom is a professional chemist and self-taught economist who has been following and trading stocks for nearly 12 years. He has no formal ties to the financial industry and considers that an asset in his analysis of the interplay between monetary policy and capital markets.

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