a letter written to editor of

http://news.goldseek.com/GoldSeeker/1231822800.php

“Dear CIGAs,

With crude oil getting whacked and the Dollar having another one of those “let’s get out of risky trades” rallies, gold had as much chance as a snowball at one of Al Gore’s global warming symposiums (Note to Al – look out the window every now and then if you want to learn something – that white stuff that is everywhere is called ‘snow’). It collapsed through downside support near $840 and continued lower driven by sell stops until it breached the $830-$828 support level. If gold cannot recapture that $830 level and hold above it, technically-related selling pressure will increase. Support now emerges near the 40 day moving average at $814 with the 100 day moving average just beneath that at $810. Should gold move down into that region, it will be critical from a technical standpoint for the market to attract quality buying or face a much greater exodus of longs that could bring the market down to $800 or below. First resistance is back near $840 and then at today’s high. Above that is $880 which is the level capped by the bullion banks. Last Friday’s release of the Commitment of Traders data proved that it was that same crowd which once again stymied gold’s forward advance, much to the chagrin of the newsletter writers and hedge fund ninnies who were again made fools of as they chased prices higher only to have their pockets summarily picked by these vultures.

Note to the fund managers – this is not the soybean market – if you wish to make money playing the paper gold game against the bullion banks then have the good sense to alter your losing strategy and begin accumulating gold on weakness instead of the brain-dead and discredited method of chasing momentum higher. That will not work for gold. It has not worked for 8 years – why should things be any different in 2009?

Judging from the open interest readings, there are a large number of new speculative short positions being placed in this market. The bullion banks use this selling to cover existing shorts as the markets moves lower in addition to that of exiting longs. Over the last eight years, spec selling into weakness has not proved to be a profitable strategy either. The only way to have consistently made money in the gold market has to buy into weakness and sell into strength – the EXACT OPPOSITE of what these tech driven funds practice.

As a further point of note – the index funds spent the entire portion of their day today running out of all the various commodity markets that they had just run into over the past week as they rebalanced their portfolios. The commodity circus continues…. Corn went limit down, soybeans were beaten back and wheat puked – deflation is back in vogue where last week it was inflation. Copper in particular was mauled which it should have been after the stupid index fund buying of last week. Don’t like the current psyche – stick around another week or so; next week it will probably be hyperinflation only to be followed by a return to the barter system the week after that, and then a round circle back to deflation once again. Don’t feel bad if you cannot understand what the markets are saying right now – the market itself has no idea what it is saying – maybe it is attempting to get in touch with its inner child or some other sort of nonsense. Thanks fund managers for clearing things up for us all….

The impetus for knocking the grains lower was the USDA report this morning which came in with a bearish slant to it. Even at limit down corn is still 75 cents above its low made late last year and it still appears to me that prices went as low as they are going to go in that particular pit. Let’s continue to monitor both the grains and the crude oil to get some clues as to gold’s performance. Crude could not hold above $40 so a test of the low near $35 is right around the corner. What it does with that level will tell us whether a bottom is in this market as well or we are going to try for $30 before bottoming. Stay tuned.”-

Dan Norcini, More at JSMineset.com