Most Popular
1. THE INFLATION MONSTER is Forecasting RECESSION - Nadeem_Walayat
2.Why APPLE Could CRASH the Stock Market! - Nadeem_Walayat
3.The Stocks Stealth BEAR Market - Nadeem_Walayat
4.Inflation, Commodities and Interest Rates : Paradigm Shifts in Macrotrends - Rambus_Chartology
5.Stock Market in the Eye of the Storm, Visualising AI Tech Stocks Buying Levels - Nadeem_Walayat
6.AI Tech Stocks Earnings BloodBath Buying Opportunity - Nadeem_Walayat
7.PPT HALTS STOCK MARKET CRASH ahead of Fed May Interest Rate Hike Meeting - Nadeem_Walayat
8.50 Small Cap Growth Stocks Analysis to CAPITALISE on the Stock Market Inflation -Nadeem_Walayat
9.WE HAVE NO CHOICE BUT TO INVEST IN STOCKS AND HOUSING MARKET - Nadeem_Walayat
10.Apple and Microsoft Nuts Are About to CRACK and Send Stock Market Sharply Lower - Nadeem_Walayat
Last 7 days
Elliott Waves: Your "Rhyme & Reason" to Mainstream Stock Market Opinions - 6th Aug 22
COST OF LIVING CRISIS NIGHTMARE - Expect High INFLATION for whole of this DECADE! - 6th Aug 22
WHY PEAK INFLATION RED HERRING - 5th Aug 22
Recession Is Good for Gold, but a Crisis Would Be Even Better - 5th Aug 22
Stock Market Rallying On Slowly Thinning Air - 5th Aug 22
SILVER’S BAD BREAK - 5th Aug 22
Stock Market Trend Pattren 2022 Forecast Current State - 4th Aug 22
Should We Be Prepared For An Aggressive U.S. Fed In The Future? - 4th Aug 22
Will the S&P 500 Stock Market Index Go the Way of Meme Stocks? - 4th Aug 22
Stock Market Another Upswing Attempt - 4th Aug 22
What is our Real Economic and Financial Prognosis? - 4th Aug 22
The REAL Stocks Bear Market of 2022 - 3rd Aug 22
The ‘Wishful Thinking’ Fed Is Anything But ‘Neutral’ - 3rd Aug 22
Don’t Be Misled by Gold’s Recent Upswing - 3rd Aug 22
Aluminum, Copper, Zinc: The 3 Horsemen of the Upcoming "Econocalypse" - 31st July 22
Gold Stocks’ Rally Autumn 2022 - 31st July 22
US Fed Is Battling Excess Global Capital – Which Is Creating Inflation - 31st July 22
What it's like at a Stocks Bear Market Bottom - 29th July 22
How to lock in a Guaranteed 9.6% return from Uncle Sam With I Bonds - 29th July 22
All You Need to Know About the Increase in Building Insurance Premiums for Flats - 29th July 22
The Challenges on the Horizon for UK Landlords - 29th July 22
The Psychology of Investing in a Stocks Bear Market - 26th July 22
Claiming and Calculating The Research and Development Tax Credit - 26th July 22
Stock Market Bearish Test - 26th July 22
Social Media Tips and Writing an Effective Call to Action - 26th July 22
Has Rishi Sunak Succeeded in Buying His Way Into No 10 - Fake Tory Leadership Contest - 26th July 22
The Psychology of Investing in a Stocks Bear Market - 26th July 22
Claiming and Calculating The Research and Development Tax Credit - 26th July 22
Stock Market Bearish Test - 26th July 22
Social Media Tips and Writing an Effective Call to Action - 26th July 22
Has Rishi Sunak Succeeded in Buying His Way Into No 10 - Fake Tory Leadership Contest - 26th July 22

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Price Making a Base

Commodities / Gold and Silver 2010 Jan 03, 2010 - 12:13 PM GMT

By: G_Abraham

Commodities

Best Financial Markets Analysis ArticleI have been on record that am not a gold bug but when opportunity presents itself, one does not care whether one is a bug or not or whether one knows anything about the asset at all. The Gold opportunity is one such case. Nearly the whole world is going negative on it as it has crashed 11% from its peak. Even when it climbed, HUI Gold sentiment index was never close to its all time highs. Now that it has crashed it is well below its average. That just shows Gold is again turning to be hugely a contrarian’s call.


Gold charts clearly is showing a solid base being made which is going to take its next logical target of $1300 before March 31 2010. I have peak target of $1500 in 2010 before it crashes back to 950 by the end of the year as FED will hike rates to increase demand for its auctions.

The charts are annotated with explanations.
Any bull rally needs the previous longs to be taken out and new people to enter. That is exactly what has happened as volumes indicate. In spite of the long volumes being taken out, the RSI is above 40 and STO is turning up with a strong inverted H&S pattern.
These are all very bullish signals for Gold. Gold may not go beow India buy price of $1,045.

One of investment themes for me is GOLD for 2010 at prices below $1100 with a near term target of $1300 and a 2010 target of $1,500.

I have only discussed the charting aspect for GOLD. the fundamentals for Gold are even stronger than before:

  • FED target for Debt auctions for 2010 to be larger than 2009 and may cross $2.5 trillion. This is the best case with FDIC losses under control. If there is any further housing price fall, FDIC losses will accentuate and increase the FED auction limits.
  • Central banks around the world are net buyers. Therefore there is no large scale dumping of Gold except the naked short selling at COMEX.
  • Investment demand for Gold is only going to rise with ETF launches increasing by the month. Paulson is the latest to have launched GOLD ETF. I will never doubt a winning hedge fund manager. They normally have a tendency to repeat their success. Paulson was among the stars of the sub prime era as he shorted it to its limit.
  • GOLD supply demand have never been more favorable as supply has been consistently been falling.

Gold is a peculiar asset class which is being supported by both technicals and fundamentals. The question is what happens when FED raises the rate. The obvious answer is GOLD will melt down to $950 but not before it takes out $1,500.

A rule in investing:

When technicals and Fundamentals both support a rally, Go for it !!!

Godly Abraham
http://investingcontrarian.com/

Formerly a hedge fund analyst for India's largest fund house and currently a Private Equity fund analyst with a swiss firm, Godly Abraham is an active writer at INVESTING CONTRARIAN which is a daily online publishing house, covering investing ideas and economic analysis on wide ranging topics but mainly specialized to covering US,UK, EU and BRIC countries and their political ramifications.

© 2010 Copyright Godly Abraham - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in