This week in gold we have seen prices drop lower creating a lower low. This is generally not a good sign if we want to see higher prices in bullion and gold stocks.
Bear's Lair
Bear Markets always follow Bull markets and a severe stock market correction is long overdue. Bears Lair will spot, monitor and analyze the stock market correction as it develops.
Trading without indicators is like running blind and it encourages emotional trading that is the bane of successful investors.
The Gold sector has been performing relatively well over the past month. The price of gold has broken trend line support but is still holding horizontal support and forming a bull flag.
PART 2: IT'S SIMPLY IMPORTANT
DEDICATION TO SCARAB
Historically, bear market rallies have lasted 18 to 21 days on average and we have just finished that cycle late in the week. Will history rhyme this time? I think Mark Twain may have it nailed this time.
Last Friday I said we should be looking for a short-correction because the CVI (Climactic Volume Oscillator) was very overbought, and prices were approaching overhead resistance.
It is evident to all the US economic environment is an unmitigated disaster. In fact we seem to be hell bent for leather falling into another Great Depression (the recent Bear Market Rally in Wall Street notwithstanding).
Last week all three resources pulled back after posted gains the week before. This week will be interesting with gold trading at support, silver just above and oil looking like its going to come down and test support as well.
I believe that the fundamentals for gold stocks are widely misunderstood. The current environment we are in is wildly bullish for gold stocks. This is not because of inflation, but because of deflation.
Gold bounces off support again today with some indicators pointing to much higher prices.
GLD Gold ETF Fund - Daily Trading Chart
A crisis of global confidence in the USDollar is upon us. Foreigners have begun to lose respect for USGovt approach to problem solving, for US bank administration, and for USDollar custodial management.
Since 2005 we have shared our thoughts regarding our expectations of how the markets might move in this current large cycle.
People everywhere are depressed and confused. Their depression is due to their net worth being severely lacerated and their confusion arises as a result of not knowing what to do next.
The next gold bull market could be just around the corner and with thought in mind; it has many traders and investors on edge, because they are worried they could get left behind.
Last week a very dangerous precedent was set when the Fed announced that it is going to start overtly intervening to backstop the ailing Treasury market. The market's verdict on this announcement was immediate and unequivocal.
It seems the dead cat bounce may now be behind us as the US markets resumed their decline late in the week after testing important breakdown levels.
March 20, 2009 -- I've written in the past that if you want to make 'BIG' money in the market, you have to take an over-sized position and be dead right on the trend. The last time I did that was in late-1958.
On Wednesday, March 18, another handsome gift was delivered by the Fed to the bond bulls.
The party was good while it lasted or at least that is what we thought.
You may have heard the old saying that "the Market is the news", and it is true.
As of the close yesterday (and actually before then), the 50 year returns for holding physical gold are much higher than the 50 year returns for the Dow Jones Industrial Average.
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According to the Talmud you should keep one-third of your assets each in land, business interests, and gold.
