By Jim Sinclair
Tomorrow is the first day Greece receives a tranche of emergency funding which of course caused some euro short covering from below 1.2236 to the present 1.2394. Recall I gave you the 121 1/2 to 122 1/2 as support under the break of 126.

The present relationship, although short term, is that gold is moving in the same direction, of the US dollar. That means that as the US dollar falls markets interpret that as a relief of the euro crisis which results in longs taking profits and shorts establishing positions in gold.

A softer dollar today as a product of short covering in the euro for very modest technical and fundaments tidbits means temporarily lower gold as the euro crisis has caused a rush to gold by euro holders. That relationship will stop, but the euro must cease first.

As I explained to you in detail, the next target of credit default derivatives after battering the euro is to batter the US dollar.

After the euro is done within a few sessions the relationship between the dollar and gold will return to inverse in a very big way. This I assure you. With more than 50 years in markets you learn a few things about the madness that goes on.

In light of this consider what Rick Santelli has to say about a problem we have been aware of for a long time. Maybe Rick should read the prospectus that says specifically this ETF does not have to hold real gold bullion.

Gold bullion is on its way to $1650 and above making today’s reaction or any nearby reaction totally irrelevant in the big picture.

If you are playing short term your opposition is Goldman and all the little Goldmans. That strategy makes no sense. Speculating short term or selling your gold insurance is totally wrong.

Courtesy: www.jsmineset.com

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