Gold breakout ?

As I have been mentioning, gold and silver have been on my watchlist for a while here and today it made a nice breakout move up $23 with an hour left til the gold market close. I was really taking notice yesterday when gold did not drop when oil did and the overall markets, which are wakeup signs of a possible disconnect,especially when the US dollar went up.

There is some big talk out there for several reasons why gold popped.

1. It's the seasonal time, Indian wedding buying etc.

2. But the second is a biggie and that is the Chinese who have taken massive hits on derivatives have basically told the 5 or so major banks they owe to shove it, we're not paying because you never told us how dangerous they were. In other words they say they got sucked in to buying useless paper and they are stiffing them. What happens when you stiff Vegas for betting big ? Hmmm... well not maybe the same ending but even if they pay up half the losses in the end,it could take much time and debate,not to mention the losses show up on the banks bottom line.


I may be out in left field here but I think this has been building behind the scenes much longer than we have been aware and could be one reason why gold has been so resilient the last couple of months with no major $50 swings down. There must be some major support to suddenly put a halt to that type of market action which has been going on for years now.

So what does one do to profit here ? As a master trader tells me, it is best to wait out the breakout and see how high the next step goes then see if it blows off some steam and reloads.

The other important part is to see if it can break the old highs of $1000, to me that is the ultimate signal. I am scouring for good cheap gold/silver plays and are eyeballing a couple but not ready to pull the trigger quite yet.

Also make note that in Canadian dollars gold is trading at around $1055 and the old high back in March was $1247 so there is about an 18% or so difference of room to work within before any thoughts of missing the boat if this turns into a major gold bull move to $1200 US as many have thought.

One final note,we had the Loonie and the US dollar move down today,now that is concerning but may be the currency intervention the Bank of Canada has been threatening to do. But how long can they keep it up ? Not long is my thinking.