Ready?

Because by the looks of the pre-market, here it comes. Down the page you will find the chart of gold (weekly) showing some reaction targets. In fact, this was seen as possible (daily) nearly a month ago. I, like many of you was 'hopeful' the reaction had been satisfied at the higher levels, but it appears this is not to be (although I have seen some pretty wild pre-market head fakes in the past. This reaction conveniently comes just before the meeting of some powerful people who have routinely conferred / conspired with other powerful people (like Paulson). These people will set 'easier' monetary policy next week. It also comes as their European counterparts are coming under pressure to do the same.

We in the PM sector rode an overbought status to a frothy top and it is important to remember that this is how the sector reacts. It is a small market and the swings - both up and down - are exhilarating and violent. At times like this I think "Gary, you effun' knew this downside was coming and yet here you sit with too many gold miners on your books". But this is all psychology that must be managed as nobody has a crystal ball. As one of the people who (thinks he) 'gets it' regarding the gold play on current macro events, I simply must always have a core of miners at all times as long as the fundamentals remain positive. I have been less of a trader since mid-summer because when the funda's changed, so did my stance. I am a card carrying bag holder who will continue to add to his bag as this reaction climaxes. Meanwhile, a Fed that has been handed lower oil and lower gold is a Fed that can pretend to be in control. It's all a game of cat and mouse.

The US Dollar is getting its moment. This was also needed. What we have going on here is bullish for the gold sector beyond the bi-polar psych of the immediate term (euphoria quickly turning to fear and angst). Let the Fed look strong. Let the Dollar look viable. Wash out the significant weak hands in the precious metals trade... and move on. Wash rinse and #@!%'n repeat. Edit (9:59) There, now that was easy ;-)