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Futures Market Intelligence Report

Precious Metals & Bullion Information

Gold Alert!

November 16, 2011

Article updated 12/1/2011 6:51:03 am

NOTE: When reading our intelligence information reports the original text will be in white. Updates will be dated, formatted in a light blue and placed logically within the report. ~~Significant changes will appear with a strikethrough.~~ This preserves the orginal information yet allows updates.

Gold Market

The Financial Police® are sharing their Gold intelligence with all Citizens of the World. Our intelligence information is showing a very high risk of a major price decline in the Gold futures market.

Intelligence Information Update 12.1.11

In our last update on 11.22.11 we forecasted a rally in Gold and a sell off in the US Dollar index (the intelligence report forecasted a rally in the Euro as well). In our 11.18.11 update we modified our Gold forecast saying the rally would not take out the previous high at approximately $1800 on the daily chart. Let’s examine current information and how it affects Gold futures.

Elliot Wave post triangle thrust has the Euro in an intermediate term rally and the US Dollar in a sell off. We feel there is a correlation between the Euro increasing in value and Gold. The currency translation, and other factors to be covered in a future intelligence report, suggest the inflow of money into the Gold market will continue short to intermediate term. So, how high will Gold go?

We don’t know at this time. The short term picture is to ambiguous.

The overall forecast to sell your Gold into this rally stands. At this time, we don't know how far this rally will go. However, the strategy is to sell into strength.

Gold was trading at $1751 when this new information was published.

Intelligence Information Update 11.22.11

The intermediate term forecast for Gold to fall still stands.

Our short term forecast was unclear; therefore, we favored the primary trend to the downside. Now we are getting some clues from the US Dollar index futures.

The most important information influencing Gold is the story we wrote yesterday about the US Dollar futures. A rare diagonal triangle has traced out and is forecasting a swift, sharp sell off in the Dollar futures market. We feel the metals will benefit from this outflow of money from the Dollar. Use the dollar decline as a gauge to how long and far Gold will rally.

Use the strength in this short term rally in Gold to sell.

Intelligence Information Update 11.19.11

Recent action in the Gold futures market has caused us to change our forecast. The short term wave structure is not giving us a clear signal like the Silver market. In fact, on an hourly chart, Silver showed more relative strength to Gold on Friday. This is a small clue but makes sense in the context of our Silver report.

It is difficult to forecast a decent short term really in Silver (as we have) with Gold selling off dramatically. Therefore, we expect Gold to simply show some relative weakness to Silver next week.

Furthermore, the lack of certainty in the short term wave structure in Gold is being trumped by the intermediate term wave structure. At this juncture, we do not think Gold will make a new intermediate term high above $1800.

Intelligence Information Update 11.18.11

Even though the intermediate term forecast for Silver is very bearish, the short term wave structure is calling for a rally. Please read our Silver intelligence information report for details.

Since Gold has shown a higher relative strength to Silver over the recent months, if Silver rallies significantly, so should Gold. In other worlds, we are using the clearer short term outlook for Silver as a forecasting tool for Gold futures.

Our forecast for a new intermediate term high above $1800 ~~stands until events unfold (and they can) to suggest otherwise.~~ is no longer forecasted(11.19.11).

Please be advised when reading our intelligence reports to always give more weight to the bigger picture.

Emotional Luster of Gold

Throughout history, Gold has been coveted. It has also been subject to significant price volatility. While Gold is always a good asset to have, there is also a time to be a net buyer, or net seller. At today’s pricing, the latter seems more prudent. Let’s explore why.

Fiat Currency Money Laundering

For some time, the Financial Police® have suspected a money laundering scheme of global scope. This intelligence report will not cover this in depth; however, the overall concept correlates to what has been happening in the Gold and Silver markets. Especially Gold.

The massive creation of fiat money, whether by printing or digital via computers, has created an unprecedented pile of increasingly worthless paper chasing real assets. The theory is simple – spend it while it still has value and launder it into treasure. This explains the fuel behind the rise in Gold, Silver and continued record prices for rare art, rare photographs, rare precious jewels, rare antiquities, large land acquisitions and sports franchises etc.

In fact, this also explains the divergence between Gold and Silver. Silver is the poor man’s Gold for the “Average Citizen.” Gold is for Kings. Gold is for the Gods. It is that simple. The majority of fiat money laundering has been willfully directed at Gold and the average Citizen has been priced out of the game. What a real shocker, eh?

This also explains why the Silver market is in BIG trouble – time to spank the average Citizen again.

From a high level, the suspected fiat money laundering process has three steps:

Create and sell fiat US dollars.
Launder fiat USD's into Euros.
Buy Gold and treasure with the laundered Euros.

The almost perfect negative correlation of the US dollar versus the Euro illustrates step 2 in the process. They mirror each other. You can’t make this stuff up. Look at Chart 1. It is a weekly overlay of the USD and the Euro. USD is black, the Euro red.

Chart 1

Summarizing, more and more fiat dollars are chasing fewer and fewer real assets. Certain assets are favored more than others. While all assets are vulnerable to price declines, the less favored, such as Silver, have a greater risk. This explains the recent divergance between Gold and Silver.

Finally, when enough fiat laundering has been completed, the Gold and Silver markets, the Euro, and other assets as well, will sell off dramatically.

Gold versus Platinum

To further explore our forecast of a large sell off in the Gold futures market, let’s compare Gold to Platinum and see if there are any clues.

The most obvious clue is historically Platinum trades with a premium to Gold. Take a look at Chart 2 (click for a larger image). Going back as far as 1996, it shows approximately four times where Gold has traded at a premium versus Platinum. Note the period starting July of 2011 at the top right of Chart 2.

Chart 2

The purple vertical line labeled “Divergence” shows at the time of this writing, the “Divergence” has never been wider in over a decade and a half. Also, as we can plainly see, it is not unusual for Platinum to trade at a very significant premium to Gold bullion. Clearly, Gold is in uncharted waters with this historical premium over Platinum.

Will Gold Make a New High Above $1900?

Based on our intelligence information and analysis of the Euro, Silver and Platinum futures markets, it is unlikely. In fact, there is a greater probability all three – the Euro, Gold and Silver are already in bear markets.

That’s right, I wrote it! I am also confident I will not be invited to certain parties because I wrote it.

Will Gold Make a New High Above $1800?

The current wave structure using Elliot analysis supports this conclusion. Our intelligence information suggests Gold has a strong correlation to the same sideways corrective pattern Silver is currently tracing out.

The current wave structure no longer supports an intermediate term new high above $1800. The short term correlation to the pattern silver is tracing out is weak at best. In fact, Silver showed a higher relative strength then Gold on Friday, 11.18.11. (11.19.11)

Summarizing, in the very near future, the market psychology and the biblical proportion greed thrust upon humanity by a few powerful entities will manifest itself into major sell offs in the Euro, Gold and Silver markets the technical indicators are forecasting.

Stay tuned for updates to this intelligence information report.

Update 11.18.11

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