Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
Gold Price Trend Forcast to End September 2019 - Video - 25th June 19
Today’s Pets.com and NINJA Loan Economy - 25th June 19
Testing the Fed’s Narrative with the Fed’s Data: QT Edition - 25th June 19
What "Pro Traders" use to Find Profitable Trades - eBook - 25th June 19
GDX Gold Stocks ETF - 25th June 19
What Does Facebook’s LIBRA New Crytocurrency Really Offer? - 25th June 19
Why Bond Investors MUST Be Paying Attention to Puerto Rico - 25th June 19
The Next Great Depression in the Making - 25th June 19
The Bad News About Record-Low Unemployment - 24th June 19
Stock Market New High, but…! - 24th June 19
Formula for when the Great Stock Market Rally Ends - 24th June 19
How To Time Market Tops and Bottoms - 24th June 19
5 basic tips to help mitigate the vulnerability inherent in email communications - 24th June 19
Will Google AI Kill Us? Man vs Machine Intelligence - 24th June 19
Why are Central Banks Buying Gold and Dumping Dollars? - 23rd June 19
Financial Sector Paints A Clear Picture For Stock Market Trading Profits - 23rd June 19
What You Should Look While Choosing Online Casino - 23rd June 19
INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - 22nd June 19
Here’s Why You Should Drive a Piece of Crap Car - 22nd June 19
How Do Stock Prices React to Fed Interest Rate Cuts? - 22nd June 19
Gold Bull Market Breaking Out! - 21st June 19
Post-FOMC Commentary: Delusions of Grandeur - 21st June 19
Gold Scores Gains as Draghi and Powel Grow Concerned - 21st June 19
Potential Upside Targets for Gold Stocks - 21st June 19
Gold Price Trend Forcast to End September 2019 - 21st June 19
The Gold (and Silver) Volcano Is Ready to Erupt - 21st June 19
Fed Leaves Rates Unchanged – Gold & Stocks Rally/Dollar Falls - 21st June 19
Silver Medium-Term Trend Analysis - 20th June 19
Gold Mining Stocks Waiting on This Chart - 20th June 19
A Key Gold Bull Market Signal - 20th June 19
Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - 20th June 19
Investing in APPLE (AAPL) to Profit From AI Machine Learning Stocks - 20th June 19
Small Cap Stocks May Lead A Market Rally - 20th June 19 -
Interest Rates Square Minus Zero - 20th June 19
Advice for Financing a Luxury Vehicle - 20th June 19
Stock Market Final Blow Off Top Just Hit… Next Week Comes the FIREWORKS - 20th June 19
US Dollar Rallies Off Support But Is This A Top Or Bottom? - 19th June 19
Most Income Investors Are Picking Up Nickels in Front of a Steamroller - 19th June 19
Is the Stock Market’s Volatility About to Spike? - 19th June 19
Facebook's Libra Crypto currency vs Bitcoin: Five Key Differences - 19th June 19
Fed May Trigger Wild Swing In Stock Index and Precious Metals - 19th June 19
How Long Do Land Rover Discovery Sport Brake Pads Last? - 19th June 19
Gold Golden 'Moment of Truth' Is Upon Us: $1,400-Plus or Not? - 18th June 19
Exceptional Times for Gold Warrant Special Attention - 18th June 19
The Stock Market Has Gone Nowhere and Volume is Low. What’s Next - 18th June 19
Silver Long-Term Trend Analysis - 18th June 19
IBM - Watson Deep Learning - AI Stocks Investing - Video - 18th June 19
Investors are Confident, Bullish and Buying Stocks, but… - 18th June 19
Gold and Silver Reversals – Impossible Not to Notice - 18th June 19
S&P 500 Stuck at 2,900, Still No Clear Direction - 17th June 19
Is Boris set to be the next Conservation leader? - 17th June 19
Clock’s Ticking on Your Chance to Profit from the Yield Curve Inversion - 17th June 19
Stock Market Rally Faltering? - 17th June 19
Johnson Vs Gove Tory Leadership Contest Grudge Match Betfair Betting - 17th June 19
Nasdaq Stock Index Prediction System Is Telling Us A Very Different Story - 17th June 19
King Dollar Rides Higher Creating Pressures On Foreign Economies - 17th June 19
Land Rover Discovery Sport Tailgate Not Working Problems Fix (70) - 17th June 19
Stock Market Outlook: is the S&P today just like 2007 or 2016? - 17th June 19

Market Oracle FREE Newsletter

Gold Price Trend Forecast Summer 2019

Gold Used as Political Weapon Could See Bounce Back above $900

Commodities / Gold & Silver Sep 02, 2008 - 06:53 PM GMT

By: Captain_Hook

Commodities Gold is a political metal, where to this day its primary movements are still governed more by politics than any other factor taken in the proper light. You see it's all about the dollar ($), and it's role as global hegemony, where post World War II its imposition as the world's reserve currency was in effect de facto / soft colonialism and economic domination. So, gold's rise since 2001 is actually the measure of global de-colonization in effect, with recent actions taken by Russia in Georgia an acceleration of the trend. That's right, and while Russia may not have the ‘superpower' status it was credited with up until the Union's fall, which accelerated with the dismantling of the Berlin Wall in 1989, it has been re-organized under Putin into a regional power of strategic (perhaps supreme with its energy related stranglehold on the rest of Europe) importance, both economically and militarily once again.


So, even though the North American propaganda machine may not be making much out of recent events in Georgia (especially with the Chinese Olympics to focus on), characterizing it as something that should have been expected , where the is US on the job protecting its interests anyway, once you understand the above, one can see how this situation could mushroom into something much larger. (i.e. potentially World War III if the US perceives a rapid unraveling of $ hegemony dominance.) What's more, now you may better understand why I was hypothesizing about the takedown in gold (and crude oil) being related to the Georgian situation the other day , because again, in understanding the above, it's not difficult envisioning an escalation of events that could possibly spread to the Persian Gulf (the US could use this an excuse to accelerate an Iranian aggression), turning the larger picture into something considerably more ugly than is presently being contemplated by most.

Now, it's important to understand I am not forecasting this. However, at the same time, it's also important to understand the larger political picture presented above, along with how gold fits into the equation. Here, it should be remembered that whether the process of $ hegemony dominance decay is gradual, or accelerated, which would become a greater likelihood if Russia exposes US military weakness / stress in pressing forward with Georgian aggressions in spite of what appears to be a measured response on the surface by the States, gold will have its day one way or the other. What's more, it's also imperative to understand that gold is not a commodity like the US, central banks, and other irresponsible bureaucracies the world over would like you to believe, but is in fact the true global reserve currency, that being the antithesis of $ hegemony and Ponzi finance credit creation.

Further to all this, and in looking into the future then, it becomes easier to understand why regionalism in economic affairs (a reversal in the ‘globalization' trend) will likely accelerate in coming years, spurred on by increasing energy / transportation costs. Part and parcel of this will of course be the decentralization of currencies as centerpiece, likely to become better understood by increasing numbers once gold sails through the $1,000 mark. This is not to say that paper currencies will not survive in altered states as means of exchange given the sheer numbers (of people and digits) involved at present, however once the hyperinflation (first) / deflation (second) cycle matures further, international trade will need be facilitated with at least a gold backed cover clause on local / regionalized specie.

Moreover, and in a larger context, this is what Jim Sinclair is referring to when he uses the term Federal Reserve gold certificate ratio , referencing the likelihood that at some point, potentially as soon as next year if the credit crisis keeps unraveling at present trajectories, foreigners will stop taking $'s for goods (think oil, manufactured goods, etc.) unless some degree of convertibility into gold is attached to the currency. And this might be just the beginning of process in this regard, where it's not inconceivable that if hyperinflation were to grip macro-conditions on a global scale, gold related reserve ratios would need to be continually ‘jacked up' to ensure payments in real terms did not decay to an appreciable degree prior to delivery and / or sale of the product. In this light you can of course see how hyperinflation must necessarily / eventually fail (and would be limited in a global context) because logistically it's impossible to do business profitably involving long distance procurement of goods and raw materials in such an environment.

Knowing what we know concerning the above subject matter now, it's time to turn to the charts to see what condition our condition is in concerning the precious metals markets. To say the least this has been a nasty week for both the metals and their related equities, where as pondered previously, it's almost as if the US was attempting to show Russia who is really boss in driving both precious metals and oil into oversold extremes on the dailies (and some weekly plots) not seen this decade. (i.e. since the beginning of the bull markets.) For this reason, many commentators are out calling this a great time to buy precious metals on the cheap. And with respect to the metals and liquid shares, I do agree, where although present proximities could be retested once again if liquidity conditions turn sour this fall, buying here for the long-term appears to be a ‘reasonable prospect'.

In terms of juniors however, where until credit / stock market conditions stabilize, one must remain cautious, as reaffirmed on Tuesday , remembering venture companies depending purely on investment capital to survive are still facing an increasingly hostile environment, and for this reason, should be considered ‘high risk' enterprise at this point. Not surprisingly, this understanding has escaped many, but may become more apparent this Fall if swooning stock markets, and a resulting contraction in margin debt , force even more liquidations of shares, not to mention operating capital for many companies would become exhausted / strained under such conditions. So remember, in spite of the above understandings, now is not the time to become increasingly aggressive with the juniors just because gold and silver are likely to bounce here. (i.e. don't forget the measured move [MM] in the S&P / TSX Venture Composite Index [CDNX] attributable to the descending / contracting triangle is projecting a decline to 1300, possibly as soon as this Fall.)

That being said, a bounce in the sector does appear in the cards given oversold readings at the moment, where it's not inconceivable gold could rally back up into the $900 area without much difficulty at all. Here, the reason we site $900 as a likely interim topping point barring the political / currency related escalation discussed above is because of a build up of speculative interest in the December Series (most popular) COMEX call options at this strike price, which will tend to hold prices down. I know that based on past experience there are those who believe a build-up of calls at higher strike prices is bullish because the ‘smart money' is suppose to ‘know something', but this is not the case. In fact, this practice has just the opposite effect, holding prices back because the bureaucracy's price managers use sentiment spikes in paper markets to push prices around.

This means that if it were not for the huge growth in paper related alternatives to physical gold (futures, futures options, and ETF's), rising inflation and commodity prices (chief amongst them being crude oil) would have pulled all precious metals (including the share markets) far higher than was experienced, where it's not inconceivable the metal of kings could have already touched the 1980 CPI adjusted peak pricing, which is in excess of $2,000, more that twice the nominal top of $1,000 witnessed earlier this year. Most people don't understand this however, which is why it's easy for price managers to keep a lid on prices despite all the various forms of inflation floating around out there that continue to be inappropriately accounted for in money supply measures. (i.e. this is why we need gold as a true barometer of inflation.) What's more, with crude oil overbought on a longer-term basis, and likely having to more fully digest a speculative bubble before pricing stability returns, this will also continue to create headwinds for gold into Fall months, at a minimum.

Unfortunately we cannot carry on past this point, as the remainder of this analysis is reserved for our subscribers. Of course if the above is the kind of analysis you are looking for this is easily remedied by visiting our continually improved web site to discover more about how our service can help you in not only this regard, but also in achieving your financial goals. For your information, our newly reconstructed site includes such improvements as automated subscriptions, improvements to trend identifying / professionally annotated charts ,   to the more detailed quote pages exclusively designed for independent investors who like to stay on top of things. Here, in addition to improving our advisory service, our aim is to also provide a resource center, one where you have access to well presented ‘key' information concerning the markets we cover.

On top of this, and in relation to identifying value based opportunities in the energy, base metals, and precious metals sectors, all of which should benefit handsomely as increasing numbers of investors recognize their present investments are not keeping pace with actual inflation, we are currently covering 70 stocks (and growing) within our portfolios . This is yet another good reason to drop by and check us out.

As a side-note, some of you might be interested to know you can now subscribe to our service directly through Visa and Mastercard by clicking here

And if you have any questions, comments, or criticisms regarding the above, please feel free to drop us a line . We very much enjoy hearing from you on these matters.

Good investing all.

Captain Hook

http://www.treasurechestsinfo.com/

Treasure Chests is a market timing service specializing in value-based position trading in the precious metals and equity markets with an orientation geared to identifying intermediate-term swing trading opportunities. Specific opportunities are identified utilizing a combination of fundamental, technical, and inter-market analysis. This style of investing has proven very successful for wealthy and sophisticated investors, as it reduces risk and enhances returns when the methodology is applied effectively. Those interested in discovering more about how the strategies described above can enhance your wealth should visit our web site at Treasure Chests

Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities, as we are not registered brokers or advisors. Certain statements included herein may constitute "forward-looking statements" with the meaning of certain securities legislative measures. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the above mentioned companies, and / or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Do your own due diligence.

Copyright © 2008 treasurechests.info Inc. All rights reserved.

Unless otherwise indicated, all materials on these pages are copyrighted by treasurechests.info Inc. No part of these pages, either text or image may be used for any purpose other than personal use. Therefore, reproduction, modification, storage in a retrieval system or retransmission, in any form or by any means, electronic, mechanical or otherwise, for reasons other than personal use, is strictly prohibited without prior written permission.

Captain Hook Archive

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


Comments

z garcia
04 Apr 09, 09:34
great article

Great article. I see gold in the same light. I like thepoints you bring up about regianlism and its effect on gold. I also like the fact that you brought up the the loss in faith of the US corrency. I also like the take on gold as a political metal. Great article! It went great with my Tim Horton's medium double double this saturday morning.

Thanks

Zeebra


Post Comment

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

6 Critical Money Making Rules