Turns out it IS your Father's gold after all.....

Well, where to start?

You all know the what happened yesterday, it was a debacle. Around 5pm last night gold was down roughly $16, at 10pm it was down around $3 as the dollar was getting killed again. I wrote in the blog that I would bet anyone a beer that the dollar would rally and gold would get crushed.

Well anyone that took that bet, owes me a beer. Imagine how I wasn't surprised, when, driving in I heard gold was down $16---why didn't that number by itself surprise me? It was where gold had left off around 5pm.

Ok, I get into the office, fire up the computer and see gold is down around $12 with the dollar slightly higher. I thought that maybe the new and improved gold would rally and turn this thing around. When all of a sudden, it did exactly that!! Before you could say "manipulation" the dollar was flat, and gold was only down $5! BUSTA MOVE!!

Ok, then the shit hit the fan. One of the ECB governors spouted off something about how all of a sudden the ECB was open to cutting rates. Well, that's all the dollar needed hear, as the euro fell about .02 against the dollar. That is a HUGH move. Now keep in mind, the schmuck that said this, is the equivalent of one our Fed governors speaking. You know those guys, they love to verbally masturbate all over themselves. In addition, all the while the dollar was rallying, oil was getting absolutely smashed as the oil inventory numbers were somewhat bearish. (It briefly dipped below $90) Tie both of these factors together and next thing you knew gold was down $25. (It closed the CRIMEX session down $20) Let's not even talk about the gold stocks; the HUI is off about 10% in two days. Oh yeah, the CPI came out also, and inflation is running at it's quickest rate in 17 years. Surprise y'all.

Ok, at 2pm, the Fed's Beige book came out and told us pretty much what we all knew, that the economy is in the shitter. This actually caused gold to rally about $5. YIPPEE!!

Also, about this time, ECB chairman Trichet came out said, "whoaa....what the F....., I'm the man here, we aren't cutting rates, our policy remains the same." This comment pretty much went unnoticed by the markets.

The stock market was on a see-saw almost all day. INTC shit the the bed last night and that set the stage for the ugly open, and it was ugly. But, the open was bought and before you knew it, the S+P was up 5. That was quickly sold and we went to lows of the day to only bounce higher. Around 3pm, the S+P futures were up around 10; at 3:30 they were down 10. One cannot trade a market like this.

Ok, so what about gold. IMO, all the news today was bullish for gold. Higher inflation, check. The ECB not raising rates, check. The ECB raising rates while Ben does, check. Shitty economic situation, check. But what did gold do with all this "great" news? It shit the bed worse than Intel.

Today was a perfect example of everything that is wrong with the gold market, and showed every aspect of what happens when "they" want it down. What happened today has ocurred several time gold has "corrected."

1. Bullish news for gold doesn't matter.
2. Bearish news for gold is disastrous
3. $20 down--when was the last $20 up day.
4. Every single rally sold, and sold hard
5. An attempted rally from the lows, to almost flat, was squashed down hard.
6. The HUI down almost 10% in two day? How much it up during this last run higher?
7. The dollar rally--when has the dollar ever sold off like the way it rallied today?
8. Gold attaching itself to any market that is down--in this case the S+P and oil. And not rallying when the other markets do. (Oil once down $2.50, closed down $1.)

And all this happened just today!!

I know this all sounds crazy. It was a fact that gold needed to come in a bit, but I would have liked to have seen it done on its terms and not because of the crazy crap that went on yesterday and today.

So where now? When I left the office, gold was down an additional six dollars from the CRIMEX close. I haven't the guts to look to see where it is trading now. Not that it matter where it is trading now as no matter what gold does in the overnight session, it gets slammed coming into Europe and then slammed again coming NY. Could it be more obvious what's going on?

Hold on, it's 9pm, let me gather the testicular fortitude to see where the yellow beast is. Lo and behold it's flat to the NY close, that's a rally of $6. Why am I not excited? Let's call it double or nothing on that beer bet that gold will be down at least $6 by the time the CRIMEX opens. Also, the dollar is slightly down, I am sure that won't be the case nine hours from now.

I only saw about 1/2 hour of Fast Money, and gold was not mentioned. However, Guy Adami, was on CNBC around 3:30ish, with a huge I told you so (even though he did it kindly). I could not believe the following statement: "Right now Gold is 90% in the hands of speculators." He also went on to say that he understood all the arguments for holding gold. But, gold is not something that is used for anything, and once again reiterated that gold is heading no where but down. He has seen this movie before.

How was this guy ever a head trader anywhere? He doesn't get it. To say gold is owned by 90% speculators is an asinine statement. Gold, is clearly under accumulation by the Asian and Middle Eastern CB's. Are they speculators, or just looking for a hedge against their dollars? You tell me.

So where are we going from here? Probably down. How far? I don't know. If I had to venture a guess, I would $875, then $850ish. I don't think the shorts are going to let up just yet. I think the action in gold stocks tells us more pain is coming. On the other hand, it's not too late to have a quick correction if gold turns around tomorrow or Friday.

Uughhhh...the gold stocks...don't get me started. They have been a disaster. I really don't even want to talk about them except to say that for you traders out reading this, there are some great buys in the pre-market. For example, GOLD was down over $3 this morning. That was an excellent pickup to make a quick point. This happens quite frequently with some names, usually GOLD or AU and happens on both the long and short side.

Given the action of gold, I really thought we were past this shit. I thought wrong. Gold can still easily be fooled with as has been evidenced over the last two days. Gold is clearly not ready to be it's own man.