Jim Sinclair’s Commentary

What Eric is saying here also lies in the shortening of the steps in the stair step gold action.

At new highs, such as now, this formation is a rare set up suggesting an exponential rise.

Rev. Doug, who is no slouch when it comes to gold, anticipates a plus $75 day very soon.

The next major magnet is $1274-$1278 more so than $1224.

Regardless, gold is being drawn by a super magnet at $1650.

COT Money Flows Analysis:  Gold
By CIGA Eric 11/20/09

The COT report continues to illustrate a contra money flow rally.  Commercial traders were heavily short at $439 on 08/05.  The consensus expectation was for a precipitous decline.  Rather the falling down the figurative elevator shift, gold unexpectedly rallied to $692 by 05/06.  Flat-footed commercial traders were forced to cover their shorts into strength.  Their net long as % of open interest had increased from -50% to -30%.

Commercial traders net long as % open interest had once again exceed -50% by 09/09.  The consensus expectation described the gold as “overloaded” trade and primed for a big decline at $990.  This expectation, however, proved to be wrong again.  Instead of collapsing, gold has rocketed to new highs.  Gold trades above $1100 and the commercial traders are once again feverously covering into strength.  Expect more to come – see COT U.S. dollar money flows.  The perfect bearish setup is almost complete.  A reversal here will accelerate things.

Click charts to enlarge in PDF format

Dear Jim,

It looks like the UK is in the grip of your Formula too!!!

Best,
BT

OECD warns Britain risks ‘debt spiral’
Britain is at growing risk of a "public debt spiral" unless the Government takes "drastic" action to cut the deficit, according to the OECD, world’s leading economic institution.
By Edmund Conway
Published: 6:35PM GMT 19 Nov 2009

The Organisation for Economic Co-operation and Development said that even if Britain reduces its deficit in line with other leading nations, it will still have the rich world’s biggest deficit from now until 2017 and potentially beyond, casting serious doubt on its economic credibility.

The warning coincided with shock public finance statistics showing that public borrowing in October was 88 times what it was in the same month last year, making it likely that the Chancellor will miss his £175bn borrowing forecast this year.

The double blow is acutely embarrassing for Downing Street, coming ahead of next month’s pre-Budget report and only 24 hours after it pledged to create a Bill to halve the deficit within four years and to reduce debt every year for the coming decade.

In fact, the OECD predicted in its annual Economic Outlook, Britain’s deficit was likely to be even higher next year than this year, at 13.3pc, raising the prospect that the Government could break its own law in its very first year.

More…