$1294.90

by John Galt
May 1, 2016 19:05 ET

Gold closed on Friday with a price of $1294.90.

Why is that significant?

Because it should alert any sane person that a long term trend line has been broken but more importantly, the three month consolidation and base building period is now over.

First a little chartistic charsima courtesy of gold:

GOLD_1YR_jgfla

Way, way, back when Jim Cramer was telling us it was still safe to own Bear Stearns, the precious metals markets experienced a similar consolidation and decline following a rally above $600 per ounce. Then, despite the warnings from these pages and several others, the financial system started to crash like a Will Farrell Ronald Reagan movie.

Despite the mocking of the ignorant and terminally stupid masses, those of us who said a pronounced breakout would happen in gold were prove correct while they whined that the government and Fed needed to save their wussy butts. Fast forward to this past week and the chart above and guess what?

The financial system is in dire straits, the Chinese banking system looks about as stable as Lehman Brothers in September 2008, and the Federal Reserve and incompetent U.S. Government are all acting like nothing is going on.

Gold is warning us with this breakout, on decent volume, that if the $1280 level holds (my technical support resistance now support) that the financial system is again in dire straits and gold should break the $2300-$2400 level before all is said and done.

Of course that is conservative. If the political situation in the United Kingdom and United States continues to deteriorate along with the revenge of the PIIGS coming back into focus, then gold will go as high as the markets will bear before trading is shut down.

Better hope anti-Goldbugs that that never happens.

Oh, by the way, got silver?

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