Good Morning Pic et al:

I have looked at Armstrong's paper and, unless I have misunderstood it, gold is well on it's way ...except for one huge factor that GATA, Arensberg and so many others have highlighted...that being the gargantuan paper short position held by two or three major banks such as JPM and HSBC.

Armstrong acknowledges that gold has now decoupled from oil and it's price has been rising in an ounce to barrel ratio (now around 22). He then says "Here, the pivot area for 2009 seems to be the $730-$760 area with the key support being still at $525-$540 zone. The major high intraday was on March 17th, 2008. A weekly below $800 close warns of consolidation. Only a monthly close below the $535 area would signal a major high is in place. The more critical support appears to be at about $680-$705. A weekly closing beneath this area will also warn of potential consolidation. A major high is possible as early as 2010-2011 with the potential for an exponential rally into 2015 if there is any kind of a low going into 2011.45. The key to watch will e crude oil. The collapse of investment banks has removed the speculation that exaggerated the trend. A year-end close below $40 for 2008 would signal a major high and serious economic decline ahead."

So, unless the Banks can short sell gold down below $730 with a weekly close of under $800 we are okay... and only if the monthly close was below $535 would it mean that gold had seen its major high over $1000 in March of 2008. From there on its clear sailing. If I were in oil, I would presume it would be a good time not to be.

The theory that the big bank gold/silver shorters will default seems almost plausible. Those in certain ETFs would be well advised to entertain other investment vehicles. Looks like things may now happen fast re gold/silver and their orphan shares that wll be having a "welcome home" ceremony of their own.

Armstrong's charts are truly breathtaking.