Gold Editorials & Commentary

Commodities so far this week have not changed much. But I can point out a few things for us to watch Thursday and Friday.

Precious Metals

- Gold GLD fund - Silver SLV Fund - PM Stocks GDX Fund

The US Federal Reserve continues to talk about their urgent Exit Strategy. My theory is they will be doing mostly talking and almost no doing. The nations that talk the least will be hiking interest rates the most, like Australia.

The "Paradox of Thrift"

Fool's Gold Basis

GLD - on buy signal.

In one of the previous essays I've drawn Readers' attention to the fact that gold has now decisively broken above the $1,000 level, and that this profound action has important implications for all gold and silver

The chart below (courtesy stockcharts.com) is of the Dow Jones Industrial Index divided by the US$ Index

The ultimate key to success in all trading, both long-term investment and short-term speculation, is simple. Buy low, sell high. Excel in this, and trading the financial markets will eventually make you wealthy.

The heralded end to the Petro-Dollar defacto standard completes the loop, the vicious cycle that will work to destroy the USDollar. In a sense, the US$ had to face an end, its sunset guaranteed when Nixon defaulted on its redemption value.

Dow Jones Commodity Index Fund - This index tracks the entire commodity market as a whole. Over the past two years we have seen commodities drop in value substantially. The good news is that we could be seeing prices rise going forward from here.

With gold at all-time highs many investors are worried about buying and rightly so. I think gold will be moving towards the $1,500 level over the next three to six months.

GLD - on buy signal this week.

GDP

With gold forging glorious new record highs (in nominal terms), traders' interest in this metal's 8-year-old secular bull is ballooning rapidly.

Commodities have and continue to be a fantastic trading vehicle for those who can stomach volatility. After last year's market crash most commodities pulled back to normal if not lower than normal trading ranges.

The story hit like a thief in the night, even bearing Biblical proportions.

There are currently serious "wars" being conducted within the boundaries of the USA.

The impending gold breakout has been so long in the making that it has engendered a "we'll believe it when we see it" mentality amongst most market participants.

Gold is behaving well technically and is, thus far, on course to break out to new highs soon.

The incredible resilience the metals are showing caused the oft cited commercials to begin to run for cover.

In Australia (as in many other countries of the world), our Federal Government's reaction to the financial crisis was to distribute money in the form of "gifts". Their intentions were supposedly honorable. They wanted to stimulate the economy.

GLD - on sell signal.

I am of the view that the world craves leadership. Not the kind that threatens or declares wars, not the kind where words do not match actions and definitely not the kind where bad decisions are repeated in the hope of a different outcome.

We have been waiting for gold to breakout above the 2008 high for almost 2 years. These charts show we are slowly working our way there.

Gold Stocks Index - The Leading Indicator for Gold Bullion

Debate stirs on whether the financial structure of the USEconomy is broken irreparably. Debate stirs on whether actions taken in the last year or two have put the nation on a path that can even achieve stability, let alone recovery.

Some years ago I penned a paper with the title "The Supply of Oxen at the Fed". I am indebted to Alan Greenspan for a great line in one of his speeches, entitled The History of Money, from where I borrowed my title.

The daily chart of the Gold miners bullish percentage index (BPGDM) is shown below, with the HUI shown in green. In the past whenever the BPGDM reached 85 or higher, it was often associated with a top.

Amid all the Red Herrings splashed across the entire Media, the one really big and significant event, which was completely ignored by the Media, happened on Saturday 9/12: We had the first huge demonstration against being taxed to death.

The market continues to whipsaw traders out of positions as volatility rises. I have put together a few charts to show you where each of our commodities are trading along with the SPX (SP500 index).