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Monty Python & the Holy Grail: The Battle at the Bridge
Gold at $354.50

James Sinclair, Jan 8/03

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For you Monty Python fans, you recall the Black Knight protecting the bridge from those that tried to cross. When King Arthur approached the bridge, the Black Knight stood in his way and said, "None shall pass." King Arthur told him to move aside but the Black Knight repeated, "None shall pass." The Battle began and the Black Knight was beaten quite badly. King Arthur crossed the bridge without any problem leaving a totally dismembered Black Knight ("Look, you stupid b*****d, you've got no arms left" said the King to the Knight). Unable to launch any offensive, the Black Knight yelled at King Arthur, "Come back here and take what's coming to you. I'll bite your legs off!" (From Monty Python's Holy Grail "Scene 4" http://www.sacred-texts.com/neu/mphg/mphg.htm.

Gold

Take a look at the 9-minute bar chart on gold I offer you today. This time 9-minute period is my favorite for trading gold in the short-term. Look at the "Battle at the Bridge" taking place at $354.50. We of course are the Golden Knights of King Arthur (Gold Bullion). The black Knight protecting the bridge for the collection of tolls on our pocketbooks is of course the Gold Cartel and the Carry Trade. Let us not put any more pressure on the gold producer hedgers as they have a large enough headache tonight. That number you know is a mathematical deduction of the average point at which all the gold spreads put on for derivative hedging in the last six years all are under water. It is a number we developed here and published back in 2001. We should be complimented that the Exchange Stabilization Fund and the Gold Cartel read and followed us. $354.50 is not a technical point as such. It is extremely important to the gold derivative hedger community but does not possess any technical capability to hold gold

Gold conclusion:

I have already suggested that you only need a ruler, a trading platform that provides minute charts at your design, and a firm view of what gold is going to do to "clean up." Gold is going to and above $400 in two steps.

There is no serious resistance to gold here at $354.50 and gold will not be stopped here at $354.50. $372 will cause gold to hesitate and we will determine then for you the character of the market.

Gold today put on a "Mighty Joe Young" performance, finding its low on GCJ @ $346 and trading to $357.30 with a close at $356.00. That's some change from the $305 to $330 experience. I therefore conclude that we are in the mark up stage of the first leg of a 5 Wave movement in gold, just to satisfy our Elliot Wavers.

Note: NY Cash gold is $355.60 bid at 3 PM EDT

Here is an excerpt of an article from today's Times (London): "During the past few months it is said to have been not unusual to see wealthy individuals walking into their local bank and exchanging $ 100,000 cash for 10kgof gold. Bars of the precious metal are piled into rucksacks and taken home, a guard against the vagaries of financial markets and the threat of war."

Silver:

Last evening my message to you was that this reaction was not going to be significant in time or in price. For that reason I saw no need to give you support prices. I will note them on this evening's chart however, for the readers; the major support is $4.81.

In my opinion, resistance in $4.98 to $5.12, and above that, at $5.37 is where silver is going on this leg, IMO.

The US Dollar: (USDX)

What makes people decide that all of sudden the dollar is healed? It isn't. It cannot be. All the fundamental components of the dollar are negative.

We are about to give 92 million taxpayers an average of $1,083 reduction in tax payable in 2003. This reduces the federal income at a time when the economy is already taking a significant cut out of federal income.

Adjustment of the federal income tax withholding will further reduce federal income significantly starting in 2003. The acceleration of tax relief scheduled out as far as 2010, now effected in 2003 in the Bush plan will further reduce federal income.

The end of "double taxation" will take another cut out of income. All of this means that a huge gamble is in place that reduction in taxes will create new jobs. That, however, is unmindful of what it is like to be the average US citizen right now. It is quite tough. They have run up debt on their home to unprecedented levels because their incomes have fallen. The average family is gambling on the economy turning up hard and fast.

Business is gambling on the family consumer continuing to consume and spend and all of the above from the White House to Main Street are looking at each other for survival. What a tangled web of mutual dependency and mutual despondency has been woven. Little attention is being paid to mindset of the nation, which is scared to death about their futures. Those of us reading this have some money or a job. Think for a moment of the huge number of unemployed who have families to support. It is easy to criticize when you have no pain or perspective of a situation. It is really an awful situation out there that the foolish talking heads ought to experience before they advise the TV world of the good times coming. Roosevelt figured it out, but too late, that recovery depends on the mood of the nation. All the economics you practice is a waste of time if you are insensitive to the sociology and psychology of the situation. A war now is not going to do much for the real problem we are facing which is FEAR.

Yesterday I made the point that the previous application of the type of the Bush plan was successful because the Federal Budget was heading toward a surplus, the trade position was neutral and the Current Account was positive and growing. Without those Prerequisites, all the Bush plan will do is cut the federal income and help all tile deficits we now have grow larger over the next 12 to 18 months. The common stock of (he US is in trouble and will remain in trouble until it is has priced itself in line with conditions. Right now that is well below 100, yet as in all markets, look at 100 the same way you viewed 104, It is an imaginary place where technical strength will surface significantly before it fails and the Dollar moves lower as measured by the USDX.

Click on the following link to view the full editorial including associated charts: http://www.tanrange.com/s/ChairmansCorner.asp?ReportID=47016

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