Dear CIGAs,

News Flash –  the Obama administration has ordered mandatory restroom use times for all Americans based on age. Those between the ages of 15 – 55 will be permitted to go three times a day at 9:00 AM, 4:15PM and 8:00PM. Those below and above that age bracket can utilize bathroom facilities more frequently but are limited to 5 daily visits. This is in conjunction with GM CEO Wagoner’s outster which will instill CONFIDENCE in the American people that the new Federal board of directors has things firmly under control and is working to secure the best interests of the taxpayer.

“WE know this will be painful to the American people”, droned the President, (you can bet your sweet bippy it will be) “but we must all do our part to get things under control. The Federal government is doing its part and now the American people must do theirs”.

In addition, the new Federal Board of Directors has ordered all Americans to reduce their caloric intake by 30% beginning immediately. “We have declared war on the Hostess Twinky”, an Obama spokesman stated. “Those things are simply unhealthy and the American people must realize that the new FBOD (Federal Board of Directors) will do their best to ensure a healthy lifestyle for all its citizens. Starting in April, all Americans must have a daily portion of tofu and bean sprouts and are required to consume at least one serving of unflavored yogurt each day (fruit used in flavored yogurt has pesticides sprayed on it and is therefore unsafe)”.

I want to be the first to admit that I have now seen the light. I now realize that for the last 230 years, Americans have been floundering in the darkness of ignorance and naivety and that what we need if we are ever going to reach our full potential and take our rightful place of power and prestige in the world, is the wisdom, brilliance and market acumen that only a new acting Board of Directors, made up of the luminaries composing the utterly brilliant Obama administration, can bring. After all, they and they alone know EXACTLY what the market is demanding of the manufacturing interests and what the average American citizen needs in order to raise a family.

“We wake up each and every morning thinking what we can do to better the lives of working Americans (news flash to the administration – keep going the way you are going and there won’t be any damn working Americans). Our careful analysis, based on long years of teaching at colleges and universities and community organizing, brings us to conclude that the average family of 4 here in the US wants automobiles that run on wound-up rubber bands and require the children to sit on the roof in order to provide the adults in the front seat with any leg room and that is PRECISELY what we are going to give to them.”

All I can say to this absurd drama that we are watching play out before us with the arrogant abuse of power by Washington, is that we are watching events transpire which will reduce our nation to the status of a third world power. This charade, in which the CEO of a major American corporation is forced out by a group of runamok politicians, is the result of what happens when American business wants to get in bed with the devil. What did they expect – roses and tiddly winks? The real truth of this matter is that Wagoner became the fall guy, the sacrificial lamb to placate the “angry mob”, so that Geithner and company can throw some more taxpayer money in the direction of GM and probably Chrysler. They realize that the angry mob must be distracted long enough in order to keep the money flowing to the bailout entities and can point to the scalp of Mr. Wagoner as proof of their “dedication and commitment to responsible oversight of the taxpayers’ money”. I suspect that the pols in D.C. are getting nervous watching the proliferation of TEA parties popping up all over the place.

Today was a “weird” day in terms of market price action across some of the various indicators that I like to watch. Bonds for example were sharply higher as the US equity markets broke down but they came sharply down from off their session highs as the buying just flat dried up.  Where did the safe haven flow go to flowing??? If you ask me, the safe haven flow must be going into ammunition because it sure ain’t going into any market that I can see. Gold too, just like bonds, caught a strong bid which took prices over $20 off it session lows as safe haven buying kicked in, but then it completely fell out of bed as crude oil prices broke below the $2.00 lower level. Gold was moving higher initially even in the face of the strong dollar but the sellers just sat all over it at the Comex and that was the end of its brief flirtation with positive territory.

It is still working within that broad range defined by $960 topside and $900 bottomside with a very short term range between $940 and $920 in between that. It needs to get back above $920 right away to avoid drifting further down towards $900. It is still caught in a struggle between negative short term technical signals and longer term dollar debasement policies. Below $900 is Fibonacci support at the $890 level.

Gold had managed to recapture both the 650 level and the €700 level in terms of British Pounds and the Euro respectively at the London PM Fix. I have been watching price action around those two levels in addition to the Dollar price. I would prefer to see gold maintain its footing above both levels in order to feel more confident about its shorter-term prospects. Gold in Dollar terms will struggle to hold its gains if the 650 level in BP terms and the 700 level in Euro terms serve as a ceiling for gold rather than a floor.

Silver managed to close above $13.00 but just barely.

We have end of the month positioning to deal with tomorrow (we might have seen some of that today) which is always a factor to contend with when looking at market price action in the commodity complexes. Also, April gold will be going into its delivery process so we are going to get a gauge of whether or not sufficient stoppers arise to unnerve the perma gold shorts. There are over 27,000 contracts still open in April as of Friday’s session. With the wave of selling that hit gold today, I would not be surprised to see that number down closer to 16,000 or so tomorrow. Maybe I will be pleasantly surprised however.

The mining share indices, the HUI and the XAU, initially followed gold higher and resisted the broad selling wave that swamped the broader equity markets but as the Comex paper gang beat up on the paper bullion price, they too succumbed to selling pressure and gave up the ghost. All I can say is that I would not want to share a fox hole in battle with some who make up the mining share bulls and I certainly would not trust them to watch my back! They have continually allowed the shorts to snatch victory out of the jaws of defeat time and time again. The candlestick chart is showing a short-term topping pattern emerging on the XAU. Bulls will need to dig in quickly and assert themselves or the bears will be able to target the 125 – 123 level on the XAU.

The Dollar continues to benefit from “at least it’s not the Euro” psychology. The Yen too is up again as we typically see whenever we get these so-called “safe haven” plays but I think the Yen is ridiculously overvalued as a result of all this buying. Japan’s economy is on life support but hey, what can one do in this day and age of “sophisticated trading strategies”? The commodity currencies, the Loonie, Aussie and Kiwi, are all sharply lower today as the commodity sector once again gets nailed on the heels of the move up in the Dollar. You are seeing the result of these computer algorithms used by the funds that target the Dollar’s price action in their buy and sell signals.

Unleaded gasoline prices fell a steep $.10 a gallon at one point during the session – at least consumers might get a bit of relief at the gas pump which is a bit of good news especially for folks up north who are already tired of winter and snow and waiting for spring to arrive, which incidentally appears to have lost its way as global cooling takes hold. Down South the grills were out in full force yesterday with the aroma of ribs, brisket and loins in the air! Don’t worry my northern pals, we ate enough for all of you up there in the frozen Klondike! I heard on good authority that some of my Cajun pals were spotted having a crawfish boil.

Click chart to enlarge today’s hourly action in Gold in PDF format with commentary from Trader Dan Norcini