Posted Sep 7, 2012 by Martin Armstrong
Gold has moved up into the 1700 level. We have closing resistance at 1720.7 – 1720.9. Gold rallied above this level, but this is the area to watch for the close of NYC. If we close above this area, then it is possible to rally a bit more but leaving this week as the highest weekly closing. The Monthly Bullish stand as the major resistance. We still have resistance at 17700 and 18000. October remains as a Directional Change and the monthly targets remain November, January, May and July.
Whenever you reach a high or low you reach the peak in emotions. This is typically indicative of important events. At highs, people are convinced it will only go higher. At lows, they are throwing in the towel and give up. The majority ALWAYS have to be wrong for that is the mechanism that makes events change. In 1999 when Britain was selling gold reserves, the expectation was Italy and Spain would follow. They did not. So expect emotions to run high. That is necessary for all important turning points.
Today remains the ideal for a high at this time. The computer projected a high for this time frame at the last Conference. The Daily Bearish now will be under the 16500 level. The critical support on the weekly level has now moved up to 16680. Weekly turning points will be 9/17, 10/01, and 10/29-11/05. Weekly Bullish are still overhead at 18000 Of course the majors stand above 19000. The forecasting Arrays are being sent to all those attending the conferences & subscribers to the Metals Report.
The key issue remains when will the shift from PUBLIC to PRIVATE take place on a grand scale. That appears to be starting next year. So we should have a breakout to the upside that will then last for 2 to 3 years. The real important aspect to watch is interest rates. The governments are keeping them very low to save money on their debts. But this sets the stage for sending capital elsewhere. You cannot make money in banks or bonds. As was the case in 1925, the yield elsewhere begins to look attractive. There are commercial real estate deals in Europe being sold with yields at 15-18%. That in comparison to 0.5% for 3 years will more than cover any downside risk. This is the key. When capital shifts, that is when inflation takes off – not more stimulus that never stimulates anything. QE1-QE2 merely placed government at risk of chasing capital once it shifts to the PRIVATE sector. Of course there are plenty of people still selling the fiat nonsense. Very nice. Then why did gold decline for 19 years between 1980 and 1999 when the US National Debt rose from 907.7 billion to 5.6 trillion? Those fundamentals sound great, but a simple correlation defeats them. The only thing that matters is CONFIDENCE of the people within government. Once they realize all these bailouts produce nothing but headlines and will never reverse the economic trend, THEN AND ONLY THEN will everything explode to the upside ON A SUSTAINABLE BASIS.