After Friday’s stunning rally where Gold (NYSE:GLD) put the fear of the almighty in to the hearts of bears everywhere blasting back through its 144 and 288 EMA to close the week at $1625.65, some stupid profit-taking was expected. Early on that is exactly what we saw. Those longs on margin that held through the weekend in case Europe blew up were likely disappointed with the lack of follow through during Asian trading and dumped into the COMEX early hours this morning looking to either get out flat or book some easy money from Friday.
Either way gold traded down as low as $1610.25 on the August contract before rallying after the COMEX close. By Monday evening the price had recovered back to $1621 per ounce. It will be interesting to see how gold reacts to the lack of announcement of a Euro-zone resolution in the coming days. Bond yields have blown out to record lows. The 10 year U.S. TIPS yield has dropped to a stunning -0.59% folks. The same thing is happening in Switzerland with their 5 year bonds having blown up in price to unbelievably low yields such that now investors are happily paying of the Swiss’s other debt, because that’s what negative yields on bonds means.
The markets were eerily calm on Monday after the chaos that was Friday. Calm Mondays rarely make for calm Tuesdays. Rumors of a European banking union have the Euro off its worst lows. A betting man would bet on the elites getting what they want here, and what they want is all of Europe under the thumb of Germany. Resistance will be met with complete trashing of your economy and currency. Just ask the Greeks.
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