Happy Nihilist

Australian home prices the world's most overvalued: The Economist

Indeed! I imagine it might look something like this: Before After

Interview by Motley Fool w/ Steve Keen on Australian Housing Bubble HERE http://www.debtdeflation.com/blogs/wp-cont...ceInterview.pdf

From NZ Herald Could be the first cracks in the antipodean dyke ? At long last . . . perhaps

Some thoughts on Gold. On the daily chart, it looks as though we may be close to a buying opportunity. In the past year, every time the Daily RSI moved below 40, it has presented a good entry point. Noted support around 1275-1300 level. However, should this fail and we see a more substantial correction, then from a longer term perspective, it looks as though the 55 week EMA (combined with a weekly RSI reading below 50) would present a good alternative entry point. Currently around 1250.

Some interesting observations by Ross Clark here E.g. ?

Double Post. Uh oh courtesy of the Sydney Morning Herald: http://www.smh.com.au/executive-style/luxu...1007-1690v.html

The big "either / or": are we approaching an intermediate term top in the price of Gold, or are we in the process of breaking out to new all time highs? Here's a technical look. On the one hand there appears to be a bullish cup & handle formation that would project to about the $1,500 level, while on the other hand there appears to be a bearish ascending triangle pattern that suggests an imminent correction. Volume has been dropping off favouring the bearish scenario, but as we all know, a market can stay irrational for a long time.

Maybe On a daily chart there is slight divergence, which might suggest a correction (perhaps in progress now?). There is an argument that the Euro could see one more lurch down to complete an AB=CD structure (from memory the target is around 1.16 I think), and although I'm no Elliot Waver, I think the current wave count on the Euro also suggests one more spike down [i.e., one more spike up in USD] before staging a more substantial rally. Anyway, personally I'm interested in a slightly longer time horizon, and for the moment the weekly chart in the USD still looks pretty good. Perhaps they should replace the yellow stars on the European flag with a yellow submarine

Well, at least in the short term, the technicals (volume, RSI, MACD etc.) suggest we could be due for a more prolonged correction. Ross Clarke has also noted an upside exhaustion in the recent price action (although he views this in the larger context of heading to $2000+). Tom O'Brien has been long Gold since $282 in 2001. His argument is quite simple: buy low, sell high. Given the recent parabolic price action in Euro Gold etc., he is arguing that now seems a good time to take money off the table? Anyway, he seems to be playing it by ear, and so far is only calling "a" top, not necessarily "the" top. But he is walking the walk, cashing in all his gold and going short! However, he is a trader, so I'm sure if the situation were to change, he wouldn't have too many hang ups in jumping back in. Although I don't think this is "the" top, I do think it is worth noting a significant shift in sentiment towards Gold by the Mainstream media. Check out his latest interview on Kudlow for a case in point! LINK

Today should be an interesting session in the PM sector. Are we seeing a bullish Cup & Handle formation in the process of breaking out to a measured target of around $1450, or are we seeing a bearish Double Top forming, leading to a deeper correction that shakes out recent panic buying? Bullish case supported by established and healthy looking long term trend. Bearish case supported by bearish divergence, i.e., rising prices, declining RSI and MACD going back to the December high. Looks like we have reached a crossroads once again ... For what its worth, Gary Tanashian suspects that Prechter has once again put a floor under the price of Gold with his most recent comments that Gold is not a safehaven! Meanwhile, Tom O'Brien remains bearish and expects to see a double top with a correction down to at least 1075.

With the benefit of hindsight Just to set the record straight. Yes, Prechter got the call on gold wrong, but I think it is important to put it in context. From FSN roundtable discussion November 1, 2003. MP3 And to help put it in perspective, these are the charts they would have been looking at:

Prechter has obviously been wrong on Gold this last decade. In my view, the last chance for him to redeem his Gold call "a little," is if we were to see Gold drop below 2008 lows of 680 in the next 12 months. Personally I don' t see that happening, and think the worst case scenario would be limited by the 233 week EMA, currently around 850. We shall see. Anyway, I think Gold's unexpected resilience (from Prechter's point of view) demonstrates that he has underestimated the investment demand for Gold (safe haven) in what otherwise is a broadly speaking deflationary environment (?).

Well, perhaps deleveraging is the wrong word. Maybe "primary down trend" might be more appropriate Anyway, I don't necessarily think we'll get a 2008 style über-deleveraging (although as you say, it is possible), but I suspect it will be unrelenting (i.e., once we have turned the corner there is no turning back ... and uh, we have turned the corner). I think Gold will be vulnerable in the initial stages of this vortex, i.e., until the drive to safety overwhelms the rush to the exits to pocket profits (selling begets more selling) and forced selling. Anyway, for the time being, I think the 34 and 55 EMA's are good targets to keep an eye on, ... see where we go from there

Yes, I think the 1000 +/- should provide formidable resistance, but don't rule out a spike down to $850. A few weeks of develeraging? I guess it depends how swift the price correction is? It seems to me there are a lot of recent buyers of Gold that are vulnerable to being "shaken out"? Also, for what its worth, Tommy O'Brien thinks we are heading for a roughly 1 1/2 year period of deleveraging ... which is conservative compared to Prechter's 6 year time frame. (I guess it takes a bit longer to get down to triple digits ) That's a great story! If only it weren't true The recent currency volatility is incredible. Both AUD and NZD have taken a considerable hit the last few weeks. In today's Sydney Morning Herald they had a chart of the Australian Dollar plastered all over the front page. I wonder whether that could be a sign of a brief bounce pause? Too much too soon? On the other hand, once that carry trade unwinds, its Sayonara suckers

A longer term look at Gold. So far, the 34 and 55 week exponential moving averages have provided good support throughout this bull market. Tom O'Brien's recent call for Gold to correct to $1075, would coincide with a move down to the 55 week EMA, currently around $1070. However, it is worth noting the bearish divergence between the price of Gold (Dec '09 peak w/ recent May '10 peak) and RSI.

L'Europfff The thing is though, the Euro has traded below 1.00 before. It's not as if we are making new all time lows. What is dramatic however is how quickly this is all unwinding. 1.50 to 1.22 in just under 6 months! Also, interesting that the top in the Euro should coincide with the election of Herman van Rompuy as European president. Some classic socionomics in action

Meanwhile, in USD, Gold is trading below its recent high of 1250 ... divergence? Maybe a little too soon to say for sure.

Tom O'Brien on CNBC http://www.cnbc.com/id/15840232?video=1493980167&play=1 According to Pesavento, we could see something spectacular in the Gold complex on Monday. http://www.economagic.com/libor.htm#UK

Well, I'm not suggesting that it definitely will be formally reincorporated into the monetary system. But regardless, it is sufficient that it is assuming this role de facto. The moment the "Gold is Money" idea becomes accepted in the mainstream, I suggest it is time to move on (?) As for rockets ...

Indeed. Also, there is very little mention of the fact that since the February lows, Gold has been correlated with the USD not Euro! Larry Pesavento remarked on this a few weeks ago and suggested it was a sign there was something very wrong in the Eurozone. Pretty spot on.

Absolutely! I'm thinking that Gold at 1000 Euro might act as a catalyst for the next wave of investment demand in Gold. Obviously we are already seeing flight from the Euro into Gold, but I think the 1000 mark will do a lot to register this idea in the public consciousness?

Well, perhaps not. However, i suspect it might be a useful roadmap to keep in mind, if only in terms of relative value. Obviously, if Gold were to become a de-facto currency, then it can't have a blow off phase in nominal terms. Also, by implication, by that stage, there would be very little debt left in the system that could threaten to push down the nominal price of Gold, a la deflating bubble. But at some point there will be more attractive investments. Anyway, what gave me the idea is the sneaking suspicion that we are about the move into the next phase of this bull market. I.e., moves in a different order of magnitude. Maybe its just me, but while all the attention is on Greece, the Euro and the Euro bail-out, there seems relatively little mention in the MSM about Gold making another move towards new all time highs?

If gold were to go bubble, then this is what it might look like (although I'm thinking the "New Paradigm" might refer to a de facto Gold standard of some sort)? Anyway, looks like tonight could be an interesting night in the yellow metal: And possible Cup and Handle in Swiss Francs (from Swiss Franc thread):

Will it be a case of "history repeating" or "lightning never strikes twice"? The volume on GLD is cause to re-consider the bullish case in the short term. In any case, it looks like it shouldn't take much longer to get a clearer picture of where Gold is heading in the intermediate term.