Gold and the Euro Announce the Arrival of 2012 Deflation

By John Galt
December 28, 2011 – 12:45 ET

The mid-day action in gold is a nasty reminder that when deflation warnings are ignored, the ignorant shall be punished:

Feb Gold Futures via Yahoo Finance

With gold down almost 2% at 12:30 ET in thin trading most bubbleheads are on the financial networks pointing out the fact that gold is a horrible investment because it just sits there or that there is no reason to buy gold. In reality, once gold breaks the danger zone support levels in the chart below, it is almost imperative to buy precious metals on the dips for physical delivery, not speculation, as the creation of deflation is also an announcement of pending world conflict or a financial crisis far more severe than the 2008-2009 nightmare.

Ultimate support is around $1320 per ounce but with intraday variations, it is possible the $1280 level gets tested and violated over a short period of time.

The Euro is the other signal as the break today is far more decisive and an indication that the year is over and no one wishes to be long a dying currency over a holiday weekend:

Support today is at 129.18 at the close, which has been violated intraday, and ultimately the price as expressed above by the FXE ETF will be around 126.40, possibly by year end or the end of next week. After that the “Armageddon” trade is on at 1.20 with which a failure at that level could mean parity and total collapse of numerous U.S. and European bankers.

Panic now, beat the rush!

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Gold/Silver/Dollar Charts


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