Gold Editorials & Commentary

Last week gold's major new uptrend became established when following a successful test of support at the breakout point it advanced to new highs, indifferent to temporary dollar strength.

With the steady stream of claims toward an economic recovery, one must do a reality check from time to time.

After India's central bank gobbled up half of the gold (200 metric tons) the IMF recently offered for sale, gold surged 2.4% on Tuesday to a new all-time nominal high near $10

Precious Metals ETF have gone wild the past 2 weeks. Last week we saw gold and silver prices drop sharply as it shook out short term trader's stop orders before breaking out and moving higher.

Things are looking good for the gold bugs these days. September and early October saw the (long awaited) break above $1,000. This past week saw the technical pull back to the breakout point, and Thursday was the turnaround day.

The last week of October was something else. Heavy fiscal year end selling for mutual funds seemed to put a damper on good news and push stocks and commodities lower.

The gold option writers got what they wanted this past week and while gold call holders got taken, technically it was good for gold. It's now ready to move higher again now that it's free from the shadow of option expiry.

GLD - sell signal this week.

It was Mark Twain who said "there are three kinds of lies: lies, damned lies, and statistics." Benjamin Disraeli actually said it before Mark Twain in different words and since then many more have repeated the phrase.

Commodities and stocks almost look ready for a rally or at least a relief bounce. The market is down over 5% and the normal pullback this year has been 4%.

Actually, the golden opportunity is for buying silver at current prices.

Not 'How High Will Gold Go?'. Nobody knows for sure. Anyone who says they know is a fool, has inside (illegal) information, or has a hidden agenda. The answer is not knowable as the future is uncertain.

To meet the growing needs of investors interested in investing in the broader, yet small-, micro- and nano-cap skewed, precious metals mining sector (i.e. the 'juniors') 4 new indices have come on the scene lately to wide acclaim.

The past week in gold, silver, oil, natural gas and the broad market wasn't anything to write home about. We are seeing controlled profit taking which is making the market choppy.

I remember well when gold rose from the measly price of $400 to above $700, the excitement was contagious. Then it rose from $700 to $1000 and the excitement was marginal. Now as we are at the beginning of the next major up-leg the excitement is moribund.

GLD - on buy signal.

EXIT STRATEGY

It's sure been an awesome year in the stock markets! By this week, the benchmark S&P 500 index (SPX) had soared 62.3% from its despair-laden March low and 21.6% year-to-date.

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.