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5 "Tells" that the Stock Markets Are About to Reverse

Gold Homes in On $1333 Minimum Forecast for 2010, Silver's Leveraged Breakout

Commodities / Gold and Silver 2010 Oct 02, 2010 - 08:20 AM GMT

By: Nadeem_Walayat

Commodities

Diamond Rated - Best Financial Markets Analysis ArticleThis week the Gold price blasted through $1300 resistance to close at £1319 on Friday with most other commodities either leading or lagging Gold's bull run such as crude oil soaring during the week to close up more than 7% at $81.61.


The strong drive higher to $1319 now puts gold within touching distance of the forecast minimum Gold target for 2010 of $1333 as per the January 2010 Inflation Mega-trend Ebook (FREE DOWNLOAD) and subsequent posting (Gold Analysis and Price Trend Forecast For 2010 )

Gold Price Forecast Conclusion

The two key conclusions are:

1. That the current correction is targeting $1050 to be achieved during February 2010

2. That Gold is targeting an Impulse Wave 5 into late 2010 peak of at least $1333 which remains as per the original forecast of 1st November 2009.

Both the Dollar forecast and the seasonal trend are supportive of the view for Gold price relative weakness into July / August 2010, following which the Gold price is expected to break out to a new high. This suggests that Gold may trend sideways for the first half of 2010 into July / August as the following graph concludes:

Charts courtesy of StockCharts.com

Gold Beyond $1333

As mentioned earlier, $1333 is just a target for 2010, the Gold price may even reach as high as $1,400 this year, enroute towards my longer-term target of $2,000 which would basically represent a 85% gain on the current price of $1081 and much more so when Gold stocks are brought into the equation though there trends are also subject to that of the general stock market.

Whilst the trend now demands an in-depth analysis to update the prospects for the Gold price into 2011, however a quick analysis of trend shows gold short-term overbought (MACD) but little signs for an imminent major reversal and given that 3 months remains, gold $1400 is achievable during 2010, and where gold goes silver follows with the final speculative spurts nearly always being LEVERAGED to the gold price trend and thus requiring far closer monitoring for market timing purposes as silver peaks can come and go in a flash (for more on Silver's 2010 trend see the FREE Inflation Mega-Trend Ebook).

Whilst gold priced in dollars has soared to new highs over the past month, unfortunately for investors in most other currencies including sterling the picture is that of a little more conservative recent trend that has yet to make a new 2010 high as the below graph illustrates, which highlights the importance of trying to gauge ones own currencies trend against that of the worlds reserve currency, the U.S. Dollar in which most of the worlds major goods and commodities are traded.

U.S. Dollar Meltdown

The U.S. Dollar bull market trend started to evaporate following the early June peak, an in-depth analysis is now pending to determine the probable path into 2011 which will follow the ongoing sequence of analysis with the British Pound next then UK Interest rates. To receive the analysis and forecasts in your email in box ensure you are subscribed to my always free newsletter.

Gold and Delusional Deflationists

Whilst Gold has continued to trend higher during 2010, the delusional deflationists have continued to reinvent themselves from being gold bears to now having been gold bulls all along. I have written at length on the deflation delusion over the past year so without repeating I refer to the following recent articles -

The linked analysis basically concludes that there has been NO Deflation despite continuous stream of deflationary commentary form academic economists (paid sales men for the bankster fiat money printing system) that populate the mainstream press with much of their commentary and conclusions then further regurgitated by the BlogosFear.

Whilst my analysis is primarily focused on the UK economy, however Puru Saxena recently wrote an article on the US Economy that is pretty close to many aspects of my take on bogus UK deflation expectations (24 Sep 2010 - Deflation Reality or Urban Myth? ). The most notable item in the article is the graph on total commercial bank lending that is expanding (inflating) rather than contracting (deflating), so much for debt deleveraging deflation!

I am sure there are many more such examples of the illusion of debt deleveraging deflation especially where consumers are concerned given the highly artificial government supported U.S. housing market, which follows on from more than a year of debt deleveraging deflation mantra from pseudo economists that contribute towards the primary reason why over 90% of all traders lose which I touched upon recently (10 Sep 2010 - The Real Reason Why 90% of Traders Lose ).

UK Inflation Forecast 2010

UK CPI Inflation at 3.1% for August 2010 is EXACTLY in line with my trend forecast for 2010 as of December 2009 that projected CPI above 3% inflation for most of 2010 and specifically CPI inflation of 3.1% for August 2010. My analysis since November has been warning of a spike in UK inflation as part of an anticipated inflation mega-trend (18 Nov 2009 - Deflationists Are WRONG, Prepare for the INFLATION Mega-Trend ) that culminated in the forecast of 27th December 2009 (UK CPI Inflation Forecast 2010, Imminent and Sustained Spike Above 3%) and the Inflation Mega-trend Ebook of January 2010 (FREE DOWNLOAD) as illustrated by the below graph.

UK Inflation August 2010

Current in-depth analysis is under way on forecasts for the British Pound and UK Interest Rates, to receive these in your email in-box ensure you are subscribed to my always FREE Newsletter.

Comments and Source: http://www.marketoracle.co.uk/Article23181.html

Your gold and silver bull market monetizing analyst.

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-10 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on UK inflation, economy, interest rates and the housing market and he is the author of the NEW Inflation Mega-Trend ebook that can be downloaded for Free. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 500 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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 trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Brian
07 Oct 10, 17:16
UK Interest Rates

Hi,

As always very good analysis and you continue to be proven correct in your forecasts however I prefer to keep an open mind going forward to the deflation vs inflation vs stagflation arguments. Do you have an opinion or forecast on UK interest rates over the next 2 years?

Thanks for an excellent website!


Brian
07 Oct 10, 17:19
To overpay or not on my UK mortgage?

Hi,

Would be interested to know your thoughts as regards holding some cash and whether its a good idea to use any excess to pay down the mortgage in the event of increase rate risk going forward?

I have spare cash and am considering what to do with it


Nadeem_Walayat
07 Oct 10, 21:31
uK interest rates

My next indepth analysis will be on USD and UK interest rates.

Which will answer the above,

Best

NW


Eiji
09 Oct 10, 16:45
GBP gold prices

Hello Nadeem,

Can you tell me what you expect gold prices to be at by the end of 2011 in GBP and whether you expect any large pullback before then?

Thank you.


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