There is some info contained in this message that will hopefully give us all a little hope in the New Year....remember.....think green!

By Peter Brimelow
MarketWatch.com
Monday, January 2, 2012

Gold had in fact staged a nice $70 rally from the beating it took earlier in the month -- a possibility that veteran gold bugs anticipated.

What happened? The group I like to call the "radical gold bugs" (because they make not merely the traditional inflation argument, but also claim gold's price has long been artificially repressed by public and private interests) cried foul, of course.

For example, Thursday's remarks at the website Jesse's Cafe Americain referred to "this obvious bear raid on the paper precious-metals market over past four weeks. ... One has to be a bit naive or disingenuous to ignore the blatant bombing of the market with large numbers of contracts for sale during thinly traded markets. This is the not the sort of trading that a profit-seeking trader would do."

What now? The technical damage, of course, is tremendous. Chartist Martin Pring says in his weekly: "Gold has now completed this upward sloping head-and-shoulders top and re-confirmed the break by tracing out a new low." Momentum measures "are getting oversold, and we may see a bounce. However, I think precious metals are in a primary bear market, and that is probably where we should keep our focus."

Pring may be right about gold's being oversold. On Thursday, MarketVane's Bullish Consensus for gold fell to 56%, the lowest since Dec. 5, 2008. The lowest reading in that tumultuous year was 49% a couple of weeks earlier, so this really is extreme.

An influential observer noted this. On Friday, The Gartman Letter (TGL) said: "We did not expect to see gold hold as well as it has or did in the past 24 hours, and we were not prepared yesterday to issue buying orders as soon as we shall be doing so. ... We've been neutral of since mid-November. We are about to become bullish once again. ... This is a warning."

TGL sold its large gold holdings earlier this month in its perhaps best-timed gold exit ever. Although widely denigrated by gold bugs (it's mutual), TGL actually has a pretty good gold purchase record.

Another equally surprising bullish voice was raised on Friday by analyst Frank Veneroso, reporting on Lemetropolecafe.com.

He said: "I think what we may be seeing right now is a bunch of traders trying to break a multi-year trend line in gold during the thinnest trading of the year in order to hit stops. I have a hunch that some big central banks who are under-positioned in gold are buying into this break."

Veneroso has an important place in gold history for conceptualizing, in the 1990s, the importance of Eastern physical demand to the gold price, then a new factor. But for several years he has dismayed gold enthusiasts by ignoring the metal.

On Friday, however, he concluded forcefully: "If my hunch is right, after the current year-end chart-manipulation games, and with the turn of the year, gold will rise sharply in price."

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