Wednesday, December 26, 2007

Gold Break Out

Today, the day after Christmas, gold made a break out of it's consolidation triangular flag. This week was supposed to be a quiet one. Guess not. A little Christmas present.

(click charts for larger views)

The US Dollar went down, not that it broke its short term 2 month up trend line, but it got real close to it.

Silver did similar to gold in that it broke up and out of its rectangular flag.

The US Treasury 10 year made a significant top about 3 weeks ago with a 2b signal and a 4+ (7 actually) up days in a row signal a week earlier. The 2b confirming the 4+ day signal. The 30 year treasury made a similar significant top minus the 2b. Both today made new lows today in their 2 week long new down trend.

Gold goes up. The Dow and S&P were steady. Debt (10 and 30 years) went down, and the US dollar went down. Looks likes a possible shift to the ultimate safe haven, gold, as apposed to the early and erroneously perceived safety of government debt instruments.

Remember, markets, not government central banks, control interest rates further out along the yield curve. Declining debt prices (increasing interest rates/yields) mean a perception of increasing risks to value stored in the debt instruments. Watch for much higher interest rates in the future as faith in paper financial instruments goes down.

There is no fever like a gold fever which has yet to happen.

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