If one doesn't know where they are going.. Any road will take one there.

An irrational story… was the only thing Investors perceived last week roaming through stock prices, how can it be that really everything is rising and performing great but just gold was beaten down during the whole week until the end? Stock markets top, silver, palladium, platinum – the other three precious metals were showing a top performance, US crude and US copper appearing with new buy signals, the US Dollar falling and the Euro standing right before the breakout of its consolidation pattern, upwards.

How is it possible that in these absolute gold-positive surroundings just gold is dancing its November blues all alone?

It’s a divergence that happens rarely, not seeming normal – in such an extreme – and for now making ring all the alarm bells concerning the continuation or the power respectively of the uptrend on its way since May. The gold performance last Wednesday and last Friday reminded investors heavily of the "relative weakness of gold" in December 2011 when the Big Boys permanently launched fanciful short-attacks with kinkily high contract volumes thus breaking one strong and important support after another without much resistance like a withered femoral in the course of that month before the low of the quarter of 2011 on 12/29/2011.

The volumes of the COMEX short-orders put into the market last Wednesday and Friday were so high that actually just a big central bank would be able to manage them… The gossip factory is on full speed, spreading: This time the Chinese are COMEX-short…

How long they want to hold this position is a different question, of course, so is which moment the Chinese are going to go paper-long again… The entire campaign may have been thoroughly just the matter of a very short-term action by the expiry day being shortened the December 2012 contract in order to get cheaper into the February 2013 contract. A fat rollover profit as it were.

Or the Chinese did what they like to do being clever merchants: Ostensibly they shorted the paper market in order to use the generated profits of the paper-shorts to buy from behind "cheaper" physically on large scale in London.

A super-clever merchant would go on using the very narrow and small gold market with its permanently present signal effect to prevent the raw materials that are much more important for China’s sensitive economy like silver, platinum, palladium, oil and copper from rising vehemently in price. For example, China always buys a 40% of the worldwide copper production. As a rule, because of the season especially oil and copper use to start strong rallies by end of November and the beginning of December. This year they seem to do so as well! Copper makes an average rise of a 10 % from December to March!

It’s totally important for China that copper doesn’t cut the records. So they have to buy without making a fuss about it, with little strides and little volume for not to drive up the price!

As you see, the reasons why gold is chased into the cellar are manifold. There’s "pretty little game money" and really zero risk… Who would brace himself against 7000 contracts of a short-order appearing all of a sudden? With this gold-hit, "billions" of US$ can be generated, directly and indirectly. This is at least what one would do if they were the Chinese central bank.

China is fighting against the west, or better: they are defending themselves. They are trying to keep the prices for raw materials down. They have to buy inexpensive raw materials to go on expanding solidly. So they have to slow down the raw-material prices. The profits are in the purchase. This is not only an old stock-market wise saying. No, the Chinese merchants have known that since 221 BC.

The west is creating money from nothing. There is more printed than allowed. The keywords are QE3 to QE741133 - indebtedness and Euro rescue. That leads to a a rise, a mighty rise of everything, because inflation is prevailing. The cheap surplus money has to be invested. Because of this inflation the commodities are rising, and the stock markets are rising in future.

By virtue of the odd unnatural course of gold it’s obvious for all of us that gold is showing a reaction to the 1755 resistance. During one trading week a strong monthly candle became a weak candle with shows an unusual loss according saisonality. Two extreme sell-off days were enough to prove how important the 1755 resistance really is.

And unfortunately there’s the threat now that the losses of last week may extend because the monthly time frame is showing

First the seasonality speaks for that. Over the last 30 years gold and silver have often shown a weak performance concerning the first two December weeks.

Secondly the daily time frame is still far from being oversold, so a lot may still come down… In terms of the indicators and the momentum the weekly and monthly time frames are pointing up. For me that means that any further sell-off in the daily time frame is not expected to result very deep.

But the dominating negative momentum in the daily time frame is well able to knock through the 1700 downwards next week. And then a strong sell-off possibly happens soon!

The very most important weekly support is passing at 1690$, and that is technically the lowest one can imagine. But if this one falls on daily basis the 1654 horizontal support will take effect!!!

Sketching here a possible brutal sell-off – like the one that happened in December 2011. The reason is the severe reaction to the 1755. Where there’s smoke, there’s fire.

The average negative seasonality of the last 30 years supported two more weeks of weakness.

Doesn’t look that well short term for silver also. It seems the daily silver is absolutely overbought, and now it may last as many as two weeks also till this condition is cut back. It may have hit an important high. And that may lead to another two more weeks of weakness!

Or a mighty sell-off in silver may start when the 33.30 are newly fallen below.

Caution Time for awhile???

Borrowed from Gunnar24 report