Quote from: S3052 on August 21, 2011, 05:24:38 PM

But before, a significant precious metal correction and dollar rally is due. Watch USDCHF as leading currency indicator. It is up 10% from the low 10d ago. As long as USDCHF is above this 0.7062 $ low, a big rally of the USD is likely.

According to technical analysis, perhaps. What about fundamentals? S3052 - correct me if I'm wrong but your analysis that suggests gold will drop below $1500 seems to be based on price chart indicators. Price action and analysis thereof can be deceptive; precious metals are not equities.

As can be seen below, the usual big short-sellers that include the bullion banks (JP Morgan, et al.) have been throwing everything at the precious metals, yet gold continues to move higher. How much pain they can endure remains to be seen but the more capital flows into gold and overwhelms the selling, the greater the likelihood of an enormous bout of short-covering.

Of further note, volume has been decreasing while physical gold demand has been rising. That can be interpreted as the commercials' refusal to supply large quantities of selling volume. If the buying does not abate, there will be additional margin increases or government interventions attempting to stymie demand; otherwise, uncontrollable price rise continues.

Also, should the dollar remain at its current valuation or even increase, interest rates must rise as well because return expectations are pressuring the rates into negative return territory. The deflation you expect would occur then. In other words, QE3 is imminent unless Obama suddenly grew a spine. The USD will drop below .72 as Jim Sinclair has suggested for many years.

Silver is experiencing the same conditions as above, only with a delayed inflow of capital. Just as large sellers can hit the precious metals in sequence to drag the others down, capital inflow into the main PM stalwart (gold) eventually attracts flow into silver (more so than others) which slingshots the relative gold increase (being a smaller market and more volatile based on large capital shifts). This is plain to see by tracking the gold-silver ratio, volume and open interest alongside price.

What we are witnessing here is almost guaranteed to be yet another case of a pump & dump in the PMs, just at a much grander scale. First, demand must taper off; with it increasing, that point can only be significantly higher than the current price level. The USD will certainly experience a rally and gold will definitely be hit hard, but from a much lower USD and a much higher gold price than at present.

Again, look at more than price action; the world is not made up squiggly lines on charts.