As I write this report, the spot February Comex Gold contract due to expire soon, is trading last at 1778 on the Globex session or the Electronic session which trades gold futures 23 hours daily, except for weekends and holidays.
Needless to say, after looking at today's session it appears the gold market has taken the leadership to the upside once again in 2012, by breaking above the resistance levels and Fibonacci targets of 1766 decisively, with a head and shoulder bottom confirmation.
The gold market has entered the acceleration phase that points to a short term objective of 1950 and then 2190, into the summer time frame.
According to the latest on the Euro-zone crisis, the ECB continue to kick the can down the road and more downgrades are expected. It seems they have lost control as it appears the system is broken and the inevitable may be so obvious that the gold action today might have shifted gears to accommodate what has become a very popular phrase called the "risk trade premium."
I believe the gold market is looking ahead and has started to discount the worst deflationary case possible as a consequence of an official Greece default, or any other orderly default, masqueraded by any other name it is still technically considered a default and the consequences are extremely bullish for the yellow metal.
The IMF, ECB and the Chinese central banks have signaled clearly their position on maintaining interest rates historically low, in order to be able to print and finance as much fiat currency as it would take to stimulate the Euro-zone out of this economic malaise and pull the world economy out from under this deep recession.
The long - term risks unfortunately support historical levels of inflation with the possibility of hyperinflation as we approach the end of this ponzy scheme perpetuated by our own Government.
In looking at our own back yard and analyzing the US banking situation is another headline waiting to happen.
According to James Sinclair, one of the worlds leading gold experts, our banking system is about to collapse.
US banks currently have $250 million in derivatives controlling more than $30 trillion in credit default swaps. That is a staggering amount that is clearly out of the realm of reality with no probability of success.
With the US borrowing $2 trillion per year, same as the tax revenue of the US as a whole, borrowing as much as the tax revenue is a wash and the US will never be able to repay its debt with current dollars.
Maybe the US should start to sell Bananas instead of Bonds!
Precious Metals like gold and silver are offering opportunities of historical proportions!
Disclosure: I am long PSLV.
Additional disclosure: PRECIOUS METALS PRODUCTS TRADING INVOLVES SIGNIFICANT RISK OF LOSS AND IS NOT SUITABLE FOR EVERYONE. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.