At this point fading any strength in the Euro is a very safe trade. Until German Chancellor Angela Merkel accepts some form of pooled European debt solution, the Euro will continue to see capital fly away to assets of perceived higher quality. This phenomenon has not been strictly limited to U.S. (AMEX:TLT) and Japanese (AMEX:FXY) government bonds. U.S. Corporate bonds (AMEX:LQD) have seen major in-flows as banks look to stock up on Tier 1 capital of reasonable price to keep the bank regulators at bay while this debt deflation spiral plays out at the hands of unscrupulous politicians and central bankers with grand designs of global control over everything.
Caught in the middle of this is the currency that answers to no one, Gold (AMEX:PHYS). For that reason the central banks continue to manage the rise of gold which is relatively easy since most U.S. money managers are forbidden from putting any money into the only asset that can actually protect them during times like this. It’s a truism that your perception determines your reality, until, of course, someone breaks a bottle over your head and you realize that the quiet little pub is actually a war zone of crazed football hooligans high on a toxic mix of grain alcohol, Guinness and pseudo ephedrine.
All of this is a long-winded way of saying that gold traders came to their senses early in Tuesday’s trading and began buying with both fists after the gift of Monday’s sell off was fully appreciated for the gift to their bottom line that it was as the lie of the Spanish bailout pushed through their consciousness. Strong buying propelled gold back through $1600 per ounce and it ended the Globex session near $1610 per ounce, further confirming the May 13th low of $1525 as now very strong support in the near term.
Strong support that is, until the next attack of the flying monkeys which will give China yet another opportunity to sell Treasuries and buy more gold.Previous Post » U.S. Exempts Pretty Much Everyone Except China of Iran Sanctions