By John Galt
September 12, 2011 – 00:45 ET

Bad real money, bad.

Spank you I shall, spank you.

Sigh.

Yes, the stupid are now sending an S.O.S.

And yes, much like one of my old talk show idols, ABBA does rock, IMHO. Then again so does Rush, Iron Maiden, and Mendelssohn, so please do not judge me by one video, LOL.

The ChiComs realize the truth behind the gold reality tonight via China Business News:

Contrarian analysis of gold sentiment is bullish

 Gold’s sentiment stars are aligned in favor of bullion rallying to even higher prices.

This alignment represents a big shift from the situation prevailing in the last half of July, when I last devoted a column to gold sentiment. I wrote then that the wall of worry that previously had existed in the gold market had largely disintegrated, replaced by excitement and exuberance.

To be sure, the resultant contrarian-based caution was premature. But contrarians can claim some vindication in the huge drop that bullion suffered in late August — when spot gold dropped from an intraday high of $1,929.00 on Aug. 23 to an intraday low of $1,702.80 just two trading days later.

As I wrote in July, the excitement that then existed in the gold market was “close to the fever pitch that prevailed in late April. Soon after that previous crescendo of bullish enthusiasm, of course, gold encountered a stunning air pocket and fell more than $100 per ounce.”

Regardless, that huge two-day drop in late August did scare a lot of erstwhile bulls into becoming almost stubbornly bearish — which, from a contrarian point of view, is bullish. As a result, even though gold bullion is now back within shouting distance of its August highs, gold market sentiment remains remarkable subdued.

Consider the average recommended gold market exposure among a subset of the shortest-term gold market timers tracked by the Hulbert Financial Digest (as measured by the Hulbert Gold Newsletter Sentiment Index, or HGNSI). That average currently stands at 40.3%.

To put that in context, consider that in late July, when an ounce of gold was trading for nearly $300 less, the HGNSI stood at 67%.

In other words, even though gold bullion is 18% higher today than then, the average gold timer is only slightly more than half as bullish. Since the typical pattern is for gold timers to become more and less bullish as the market rises and falls, respectively, this development is bullish from a contrarian point of view.

The bottom line? What has played out in recent weeks is the bullish scenario that I outlined nearly two months ago: In my July 19 column, I wrote that it would be bullish for the yellow metal if, in the wake of subsequent gold market weakness, “traders were to quickly run for the exits. That would suggest that there remains an underlying climate of skittishness about gold, which would allow the wall of worry to be quickly rebuilt.”

OOPS.

This was “not” supposed to happen in front of a deflationary crash according to the Ellitoidiots and other wave ANALysis crackpots. Yet somehow, some way, gold, that stupid relic of archaic universal value keeps advancing year over year. Is it a fiat currency crash?

Hmmmm….

(from Reuters, excerpted of course)

PRECIOUS-Gold extends losses on dollar, jewellers shop around

 * Gold to fall to $1,793.19 -technicals

 * Coming Up: Italy industrial output y/y WDA; 0800 GMT (Updates prices, adds details)

 By Lewa Pardomuan

 SINGAPORE, Sept 12 (Reuters) - Gold fell further on Monday after posting its worst closing since June last week but bargain hunters could cushion the fall, while escalating worries about Europe's ability to resolve its debt crisis sent bullion-priced in euro to record.

 Fears about a Greek default rose after senior politicians in German Chancellor Angela Merkel's centre-right coalition started talking openly about it following Juergen Stark's surprise departure at the European Central Bank last week. ID:nL5E7KA0SS]

 Spot gold eased $8.87 to $1,848.29 an ounce by 0233 GMT, well below a lifetime high around $1,920 struck last week, with speculators still cashing in on the metal to cover losses in equities.

 "Strength in the dollar is weighing on gold. I think perhaps some investors are also concerned about the extreme volatility in gold," said Ong Yi Ling, an analyst at Phillip Futures in Singapore.

Do what? Gold is going to “crash” and burn in the worst currency out there? Cool. A total buying opportunity.

Don’t believe me?

Check out the 2008-2011 3 year chart:

I know. That chart is hard to see. Well, let’s just say it corrects 100%. That brings us back to 2008-200 lows in the 700′s. That’s a 50% correction.

Go for it.

I dare you.

If the Federal Reserve allows this to happen or encourages it with the ECB, what will we see?

Mad Max baby.

Pray for hyperinflation and a happy-happy joy-joy ending.

Or learn how to make crossbows.

Tags: DOLLAR, ECONOMY, GOLD, THE DAY THE DOLLAR DIED