Gold Soars, USDX Tanks, Deutsche Bank-Yes Votes Lead. Nov.17, 2014
Swiss Gold Referendum Gains Traction
As noted by Deutsche Bank last Friday the Swiss gold referendum his getting more attention as the vote gets nearer on November 30 less than two weeks away. As I have mentioned here and in our live training session, this will be very big for gold if it passes. At that point there will be a net buyer of gold that don’t have much concern for price. Of course they will also most likely be a net seller of all the Euros they have been accumulating to maintain the peg established in 2011 but as one can see by looking at the EUR/CHF cross, people are already testing the peg with a low of 1.2009 last week and now hovering just above. I am sure the Swiss National Bank will defend the level coming into the vote with the minimal cost possible so don’t expect much movement in price on that pair for the next couple weeks. However the passing of the law will see the peg break heavy to the downside at least temporarily until the SNB decides how they will manage their balance sheet. They do have a few options.
If the referendum does not pass it will be a disappointment for the gold bugs including myself since this would either mean a fix of the vote or the Swiss, the country with the most sound monetary policy on the planet until the Euro peg, has lost all its bearings. We already know the government has jumped on board the crazy train with everybody else but will they be able to stop the people in deciding for them self in what is also the most real democratic country in the world today.
Lets just say it doesn’t pass and the status quot holds for now, its not going to be long until the Russians or Chinese do something of the same nature to kill the USD as reserve currency. I will admit the Chinese aren’t really much of a threat since they have printed more of the Yuan than all western countries combined over the last 6 years but Russia is quickly accumulating gold as well. I should also say this will take several years to happen with the Ruble getting crushed recently. Which is why I am hoping that the last bastion of true democracy in this world, the Swiss, can pull it off and start the transition to a sound money policy all over the world. Will they, the power hungry elite, ever learn? We can only hope.
Skype Still Giving Me the Run Around
After expressing my utter loathing for their “happy to tell me the Chad.DTFL account is unrestricted” email, telling them just how upset I was they gave it back to the hacker and they were harassing members again. I got a reply from the same lackey with a link for the same stupid form so their idiotic computer could have one last chance at proving I am me. Of course I gave them a link to Fridays commentary and suggested they send the link to change the account details to our contact page but NOOOOOOO they couldn’t take the easy way and are more than happy to push me away from Skype altogether. Do you think they are too lazy to open a link or too stupid to look at the authors name below? I suspect both. Suffice it to say if this isn’t resolved in coming days I will be sending out a new chat service for members and dropping Skype. Line Chat or Palingro are looking pretty good. Stay tuned 🙂
EUR/USD hits stops before a first push up
The EUR/USD finally pushed out of the range after hitting stops below Thursdays lows last week. I have a feeling this was more due to the Deutsche Bank article seeing the push on Gold along with weakness in the USDX and EUR/USD strength. At least for now the USD, Gold correlation is holding. Since we have seen that correlation break down before its a clearer sign of potential sound money coming back, if only for a day ha ha.
With the first push up I will have a bias for the next but we also have a topping formation brewing so I will be more open for the short from the Asian highs at 1.2547. We already have a 34 pip Asian range making it a clean level to turn from. Otherwise I will be looking for the long at the Asian lows of 1.2512 or just below at 1.2496.
GBP/USD Odd Ball Out Makes Extended Push and Reversal
At this point the GBP/USD has made the extended push then reversal once Gold started its run during the NY session Friday. However it couldn’t break above the Thursday lows showing any real GBP strength due to the EUR/GBP having another extended push well beyond its ADR Friday. It seems as though the big boys are getting somewhat leery of any UK recovery also getting wise to the fact they cant create a recovery by creating another housing bubble. Isn’t that the Einstein definition of insanity? Why it took them so long to see this is a wonder to me.
Having said that I will be open on direction for this pair today. The EG has made three extended pushes but is not at a critical daily level to turn just yet leaving more room for GBP weakness against the Euro even if it should see a reversal to push out weak holders. If they do make the reversal and Gold keeps the USD weak today, like its starting out, this pair will rise and make at least its first long term push upwards. However the best level for a long is far away at 1.5600 right now. In order to take any long from the weaker Asian lows around 1.5658 I will need to see the conviction move above 1.5693 during the London session without testing 1.5720.
Japanese GDP Disappoints, EUR/JPY Gaps Above 2013 High
The Yen crosses are going nuts this morning gaping up and now blowing their ADRs to the lows within the first hours of the Japanese open. Looking at the daily chart it seems that with only the GBP news and more reference on putting a hold on the sales tax increase there isn’t much to warrant the drop other than profit taking as the Nikkei drops. The GDP disappointment don’t make sense for JPY strength other than the prospect of the BOJ pulling back on the QE expansion announced previous, of which I highly doubt.
At this point I will remain open in direction for this pair since any USD weakness that drags the USD/JPY down will potentially pull the EJ with it. We will see what reaction we get at the 115.24 daily level on UJ. If I do get a set up long with the other crosses agreeing here I will take the risk on a long but I need to see the Yen take over price movement. Otherwise I will more likely leave this pair alone during the London session today.
Forex News Today
The calendar don’t get started until the NY session today with Empire State Mfg. expected to rise significantly. With the bar set high I se a better chance for a disappointment but as long as its close they will likely wait for Super Marios speech to see what tricks he thinks he has up his sleeve. After or during the speech is US Industrial Production that will most likely be ignored as long as its close and Draghi is still speaking. There is also a Fed member speech but I doubt Evans will say much worth pushing on.
Asian session traders have the RBA Meeting Minutes to watch tomorrow. If they hint at any rate adjustment the AUD will move accordingly. The probability for talk of a cut seems higher since China is still slowing but holding rates while they assess things is most likely.
MY APOLOGIES FOR THE BROKEN VIDEO OF INSIDE JOB IN THE COMMENTARY. I DIDNT THINK I WAS COPY WRITE INFRINGING WITH AN ITALIAN VERSION ALREADY ON YOUTUBE. HOWEVER YOU CAN STILL WATCH IT AT THIS LINK. STILL A MUST SEE!
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