Gold Editorials & Commentary

Hypothesis:

Increasing the money supply fosters currency devaluation; AND currency devaluation is a discreet, subtle method for WEALTH DISTRIBUTION.

Gold and oil traders have been on edge for the past few weeks wondering if prices will drop or rally from this correction/pause in prices. You will see in the charts below that gold and oil are at points where they could go either way very quickly.

Another week full of "good" economic news has passed. Preliminary bank earnings floated the stock markets late in the week. Although the specific banks earnings won't come out for another two weeks the talk is that they will be great.

Why can't folks break the habit of being so pessimistic at market bottoms? Not that we're complaining, if they did that would be one less thing that we'd have to go on.

GLD - on sell signal.

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.

PART 3: SHORT UPDATE AND REVIEW

Trading without indicators is like running blind and it encourages emotional trading that is the bane of successful investors.

PART 2: IT'S SIMPLY IMPORTANT

DEDICATION TO SCARAB

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.

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.

GLD - sell signal this week.

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).

MAJOR GLOBAL TURNING POINT

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.

PART 1: IT'S SIMPLE MATH

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.

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. I was very bullish on the market at that time.

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.

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.

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.