Gold in line for a run

Gold set for 'decisive move' 
March 26, 2009

Johannesburg - Gold is poised for a decisive move upwards, the SA Gold Coin Exchange (SAGCE) said in a statement on Thursday.

The SAGCE said the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund had identified a chart pattern showing that gold's short-term downtrend was about to clash with its intermediate-term uptrend.

The clash pointed to a decisive near-term price move - either up or down.

"We’ve noticed a similar picture on our charts," said Alan Demby, executive chairman of the SAGCE.

He added that it was his prediction that the gold price would move up.

Several factors, he said, prompted such a decision.

This included the fact that the intermediate-term uptrend has been tested on two occasions - in November last year and mid-January this year - with the likely result that it would hold again on this occasion.

Demby said there had been an unprecedented surge in demand for gold coins, which had resulted in the US Mint having had to stop producing its 2009 American Gold Eagle coin for collectors, reflecting determined global buying.

Demby said that as a proven inflation hedge, gold was starting to offer itself as a safe haven from the trillions of fiat dollars that had been created by the world's leading central banks. - Sapa

The Gold and Silver Bull Market Won't End Before 2014 or 2015

It's more than a little odd and bewildering that both SILVER and GOLD PRICES have been correcting for more time than the 2004 and 2006 crashes, but so far at less price loss. In other words, the correction ought to be complete in time, but not in price. This jumps to the conclusion that 2008's correction has finished, and will be shallower in price than 2004 and 2006.

By way of comparison, the gold price has dropped 15.4% so far from its 18 March 2008 high, against 12.4% in 2004 and 21.9% in 2006. The silver price as of 1 May had dropped 21.6% from its high, but in 2004 dropped 32.8% and 35.4% in 2006.

Trying to mesh this with the metals' seasonal patterns leads to more bewilderment. Usually metals drop into end-June/July for a low after a high in May, then make another high in October/November. Sometimes, just to mess with your mind, they peak & trough in the opposite seasons. This year they peaked in mid-March(huh?) and looks like they will trough by mid-May, end-May latest. Will they then rise into the summer, the usual seasonal low? Or will they trade sideways until August and then begin climbing?

About the only near-certainty here is that this correction will have ended by May 31. Mercy -- it may have already bottomed. Proof of that will only come, however, by a successful test of the lows so far.

Now everybody has his head turned down, so what are the maximum lows we might expect? US$785 on gold and $13.29 on silver. But I've been through this enough times to know that bending over looking for a bottom you'll get a crick in your neck that puts a crick in your trading. You are looking for a bottom so hard that you miss it when it comes, looking for one further down. That's silly. Silver & gold are in a bull market. What if you buy today and they drop another 10%? The bull market's rising tide will bail you out. I've worried and vexed myself about every one of these drops since 1999, and now the difference between $4.05 and $4.50, or US$342 and US$310 seems like no difference at all.

Of course, this sort of weather also brings out the really gigantic croakers. They're now singing that the deflationary depression is coming that will take gold down to $35 again and silver to 25 cents, etc., etc. and the bull market in silver and gold has ended. Well,suum quique, to each his own, but I doubt it. The metals bull market began in 2001. It won't end before 2014 or 2015, if then. Stay with your positions, add to them while metals are correcting and low, and shut your ears to the croakers like Ulysses shut his crews' ears to the Sirens. His own he left open, but he tied himself to the mast.

STOCKS are rallying, and the Dow industrials should carry to 14,000. Dow Transports made a new all-time high on 30 April, and whether the Industrials confirm that or not, for now that fuels stock optimism. Rallying stocks helps silver, so don't complain, just don't get suckered into buying or keeping stocks. Stock rally seems destined to carry into summer, again, differing from the usual flat summer pattern.

The US DOLLAR INDEX is just a-rallyin' and a-rallyin', picking up all the easy money off the inflexible & unwary shorts. Look for this rally to work its way toward 77 before it ends, but it won't hurt silver or gold too much. They've already established themselves as the alternative currencies to all fiat national currencies. 

By : Franklin Sanders

www.the-moneychanger.com

want do gain more insight into the history of gold's bull and bear markets?

A discussion of the economic factors contributing to the previous 20-year (1980-2000) bear market in gold, and the modern market conditions that make a repeat unlikely. Also discussed is the prospect of holding mortgage debt in an inflationary environment, with useful insights and guidance provided by the hyperinflationary precedent in 1923 Weimar Germany. Featuring Pete Grant and Jonathan Kosares; Feb. 4, 2009 

Thanks to Peter and Jonathan @ USAGOLD

via coinblogger

$2000 gold? Citigroup's recent price projection analyzed.

Citigroup has forecasted gold to reach $2000 in the coming year, a figure that compares closely with the inflation-adjusted high of 1980. Pete Grant and Jonathan Kosares make further comparison of the dollar-denominated price against gold as priced in many foreign currencies by which gold is currently testing all time highs. Low interest rate policy by the Fed (and other CBs), combined with massive injections of bailout liquidity and the monetizing of debt portend further currency depreciation and monumental price inflation -- not only in the U.S., but worldwide. The oil:gold and DOW:gold ratios are discussed, as well as the negative real rates of return on low-yielding Treasury bonds, all pointing the way toward a wise choice of physical gold ownership for wealth preservation.

See the above video in its original context HERE