Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Halifax Stopping Customers Withdrawing Funds Online - UK Brexit Banking Crisis Starting? - 21st July 19
US House Prices Trend Forecast 2019 to 2021 - 20th July 19
MICROSOFT Cortana, Azure AI Platform Machine Intelligence Stock Investing Video - 20th July 19
Africa Rising – Population Explosion, Geopolitical and Economic Consquences - 20th July 19
Gold Mining Stocks Q2’19 Results Analysis - 20th July 19
This Is Your Last Chance to Dump Netflix Stock - 19th July 19
Gold and US Stock Mid Term Election and Decade Cycles - 19th July 19
Precious Metals Big Picture, as Silver Gets on its Horse - 19th July 19
This Technology Everyone Laughed Off Is Quietly Changing the World - 19th July 19
Green Tech Stocks To Watch - 19th July 19
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Good As Gold!

Commodities / Gold and Silver 2012 Mar 20, 2012 - 01:09 AM GMT

By: UnpuncturedCycle

Commodities

Best Financial Markets Analysis ArticleI want to talk about gold today. Two weeks ago when spot gold was around 1,670.00 I wrote a piece entitled “When To Be Greedy” telling investors to buy. Since then we’ve survived a number of attempts to push the price lower and it is trading at 1,660.00 as I type. In short not much has happened and patience is running thin. In the meantime the dollar tried to rally and failed, the bond suffered a significant break down causing a real spike in interest rates and the Dow broke through significant resistance at 13,323.


The idea being sold by the media is that with stocks headed higher, Dow 15,000 is now being discussed, so who needs gold? Here’s a question for you: with the dollar and bonds headed lower, and interest rates headed higher, how can that be good for stocks? In any event the Dow has been headed higher for more than two years and that hasn’t stopped gold!

Just as a matter of reference on January 1, 2010 the Dow was at 10,550 so to date it has risen 25.42% while gold has moved from 1,100.00 for a gain 50.54%! So in spite of the Fed’s best efforts to pump the stock market up with a barrage of fiat currency while at the same time suppressing the price of gold with relentless intervention, gold has out performed the Dow two to one!! That tells you all you need to know.

They say a picture is worth a thousand words so if that’s true

this chart should be worth one thousand ounces of gold. Here you can see the run up from the 2008 low, including the break out to the upside in 2009 and compare it to the break out that occurred just two months ago. The moves are quite similar and notice how the break out in 2009 sputtered a few times before it finally took off. Although none of us can remember that far back I seem to recall that the media was singing the same tune as now. They were wrong then and they are just as wrong now.

Last week we saw  several attempts to  push gold’s spot price

down below good support at 1658.30, and they did manage one close below it on Wednesday, but it bounced right back on Thursday and continued to move higher on Friday. This morning was more of the same as they knocked it down as low as 1,651.50, but right now the spot price is at 1,665.10. I continue to view gold in terms of the big picture, and the big picture can be summarized with these numbers:

CONTRACT                  SUPPORT               RESISTANCE

Spot Gold                            1,596.86                       1,671.54

                                              1,522.18                          1,746.22

                                              1,447.50                          1,820.90

                                                                                       1,895.58

                                                                                       1,970.30

 These are the only numbers that matter and everything else is polite conversation at a cocktail party. Notice that I have highlighted three numbers. The support at 1,596.86 is key and coincides with the trend line that marks the break out to the upside. The other two numbers are resistance levels that once they are broken will lead to even stronger moves toward the upside.

Now I want to turn your attention to gold stocks. Some of you insist in holding mining shares and while there are worse investments, there are also better investments, like gold. Take a good look at the following three-year chart for the HUI and I will explain:

As most of you know by now that gold has posted gains in each and every year going back to 2002. Now look at this chart of the HUI and you’ll see that it is currently well below the December 31, 2010 close (and below the December 31, 2011 close). That means you’ve held these stocks for fourteen months and lost money in the process while gold is up 250.00 from its respective December 31, 2010 close. What’s more there is a real danger that the HUI could break major support at 474.00 and that could open the floodgates for major selling.

A lot of you will tell me that large short sellers heavily manipulate the gold shares market and that’s true, but there’s no column in your statement for that. It only reflects profits and losses. The HUI is a paper market while physical gold is a real tangible market and manipulation can only go so far and then you need to pony up the gold. Likewise the futures market has to follow the physical market or it will self-destruct. Add to this the fact that the dollar and bond are headed lower so you now have less paper asset shelters from the storm. For the third consecutive session gold is making a higher intraday low and once it moves above the 1,671.54 resistance it will gain speed and strength. Everyone is afraid of gold right now and the media is doing its best to stoke that fire, but now is the time to buy. Buy physical gold and silver, or the futures, and avoid mining shares for the time being. You won’t be sorry!  

Giuseppe L. Borrelli
www.unpuncturedcycle.com
theunpuncturedcycle@gmail.com

Copyright © 2012 Giuseppe L. Borrelli

- 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

6 Critical Money Making Rules