Leap Day

When I awoke this morning I listened to a couple Bloomberg Radio podcasts and then made my way to work. Gold looked weak but it was trading above $1,770; silver was firm.

After I got settled at work, I checked the gold price and saw this:

I laughed out loud. What else can one do? I think technical analysis is quite useful [obviously] but I don't think many chartists foresaw a $100 intra-day drop for gold on Leap Day.

Here is the daily gold chart I've been following:

Notice how gold stopped right at the 89 day moving average support...I'm mostly kidding. Stan Weinstein remarked over the weekend in an interview with Jim Puplava that if one draws enough moving averages on a chart, he is bound to find support and resistance eventually. That is what is demonstrated in this chart today. Whether or not the 'cartel' or the 'EE' is intervening in and controlling the gold market, it appears to me that price may carve out an inverse (BULLISH) head and shoulders pattern over the next 6 weeks. 

To trade gold is folly. The dollar cost accumulation approach has been and will continue to be the best investment strategy when it comes to investing in physical gold. 

Here is a modified weekly version of the silver chart I've been showing:

I have removed the Bollinger bands and added horizontal lines for 36 and 49 -- they are 'square of the numbers' prices like $1764 is for gold. Naturally, they've have proven to be compelling support and resistance since the initial breakout in 2010. If silver heads south from here for the next few weeks, perhaps it will trace out a right shoulder. The sell-off in gold today was overdue in all honesty, as Jean-Marie Eveillard pointed out today on KWN. 

Simply put, this sell-off in gold and silver is a gift to the accumulators and wise speculators. I wouldn't be surprised in the least if it were orchestrated to flush out stops and weak hands. 

Finally, there is this news item from today:

In my early morning haze, I noticed Tyler mentioning this but I didn't follow up on it until later in the day. When I read this article, I felt a little stunned. I honestly don't know what to make of this. Ron Paul, in full campaign mode, brandishing a Silver Eagle in front of Bernanke on Leap Day as the metal trades down over 5% intra-day? Honestly? Could this merely be a coincidence? Color me skeptical. Regardless, it shows that the truth really is stranger than fiction. And this is why I enjoy following financial markets each and every day.

Sources

Forbes -- Ron Paul grills Bernanke over inflation