Good Times as History Rhymes

As expected the gold price was taken lower to the $1,100 level right on cue. I talked about this possibility in my latest weekly letter on the weekend. The mass of gold options laying at the $1,100 level were made next to worthless, leaving the option writers/shorts, to collect nearly the full premium.

It happens almost like clockwork, but not always. And with anything that happens so regularly it should be welcomed and taken advantage of. This morning we are looking at a price in the mid $1,090's which just so happens to be where the down-sloping line is for the triangle formation.

Whether we see the downtrend line act as support or we see gold move back into the triangle is unknown but I suspect we will see $1,075 tested one more time just for good measure.

Quite often things occur in three's. The $1,075 level has been tested three times already as support and it did hold that level, although not perfectly as the price moved below to $1,050 on an intra-day basis once.

Today we have Ben Bernanke testifying, and that is never a good thing for gold. As he talks down the economic issues the last thing he wants is for gold to be moving higher. It just wouldn't look good for him, gold being the so called canary in the coal-mine.

The great Kitco chart shows the past three days action which is as near a mirror image as you could possibly see in a market.

Is it right? No

Is it fair? No

Do free markets trade like this? No

Does it make me angry? Yes, at times.

What can I do about it? Nothing. The "boys" who take the price down usually beginning at 3:00am run the asylum.

What can you do about it? Hold for the long-term and expect this short-term manipulation. The "boys" can move markets over the short-term, but as you well know gold has risen over 17% for the past nine years. That's every year, compounded! It seems we are winning after-all.

Finally, not to neglect another important event today, there are $42 billion 5 year notes being auctioned today. Gold cannot be seen as a better investment than US treasuries. Lately I've talked about the suspect bidders for the auctions. They've come from where they cannot be identified, and are likely the Federal Reserve themselves. Proving that, of course, is impossible.

But really, why bother trying? I'm happy as a clam sitting on my physical gold, making a literal fortune year after year, and the third mania stage in gold is still to come.

Once we see a TV show called "Flip This Coin" we will be near the top. I kid you not, there will be reality shows based upon these cash for gold companies house-parties long before the gold price tops.

Until that day, let's just sit back and enjoy these mediocre 17% annual returns!

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