Charts of the Year?

The below two charts could be the charts of the year.

1. the 3 Month Treasury Yield and
2. the Shanghai Composite Index.


Comments: No comments. The chart says it all.

Comments: Can you say "Parabolic..."?

HUI back at Resistance

Comments: HUI now back at first resistance after the recent collapse. With a 40 point gain since the recent low, it might not be a bad idea to take some "profits" off the down move at this point, but I wouldn't recommend selling too much, because at 324 the HUI and gold stocks continue to be a buy, especially with these new USD liquidity infusions coming almost daily from the Fed. COT numbers have been very volatile lately (just like everything else), and this past Tuesday, the showed a very large reduction in Commercial Trader net short positions, which was a promising sign.


Comments: USDX sliced through its 20 and 50 day SMAs recently. Again, 80.00 to 80.50 is MAJOR support.

Bloodbath in Gold Miners

Comments: The high level consolidation in the HUI, which started at the beginning of 2007, appears to have ended in a complete bloodbath recently, with the HUI, breaking down totally from its slightly uptrending trading range--despite Gold not doing anything interesting. It seems that the panic contagion that has hit financial markets recently is also now spreading, irrationally, in my opinion, to the volatile miners as well. Gold to XAU ratio went through the roof, and is still at almost 5.00. The two support lines in the chart above, are critical. With the credit crisis looming large, it seems that market participants are selling volatility, and unfortunately, the miners have traditionally been one of the most volatile of investments.

Actually, the current complete dumping of gold stocks (don't even get me started on silver), seems quite irrational considering the actions of the U.S. Fed recently. The Fed has added $100 billion in liquidity in recent weeks, through repo transactions, among others, as well lowering the interbank lending rate by 0.5%. In fact, it added $3.75 billion even today.

And the political pressure is mounting on the Fed. Treasury Secretary Paulson, mentioned today "We're really focused on the subprime market, and we're really focused on the homeowners -- mortgage holders -- who are in danger of losing their homes."

The ever glib Bush, insisted that "The fundamental question, 'Is there enough liquidity in our system?' And the answer is `Yes, there is,'" the president declared. Don't worry Mr. Bush, I have a hunch that when it comes to liquidity, there will soon be more than enough...

USD - Get Ready to Stick a Fork in It

Comments: First of all, my apologies for not posting for 6 weeks, I was recently very busy with certain matters. Hopefully, I'll be back to soon to making entries here on a more regular basis.

The USDX looks wonderful for Gold investors. As in wonderfully crappy. The USDX couldn't even make it past the first lateral resistance point at just over 81. Sure, it is still a bit oversold, trading somewhat below its 50 day SMA, but that chart looks very weak right now (i.e., very promising from the perspective of Gold investors). 80.00 to 80.50 is MAJOR support for the USDX, the significance of which cannot be overstated!

With the U.S. churning out horrible economic reports on an almost daily basis, I wonder if this coming week's FOMC rate announcement may result in investors finally sticking a fork in the USDX for good.

But then, who knows, the Gold consolidation has now lasted almost 1.5 years, so it could last a little bit longer yet. It's been so frustrating...