The month of February has delivered the consolidation in Gold that we had expected. Since the low established in August 2007, Gold has powered upwards in strong uplegs followed by periods of consolidation. As we move forward into March this pattern of ascent may be expected to continue. The break of consolidation in December, and now again in February, were both quickly followed by new highs. After breaking to a new high early in January at 845, a brief period of congestion occurred before Gold vaulted higher and then reacted sharply to retest the breakout to new highs at 845. It would not be unreasonable to expect Gold to perform in March much the same as it did in January. If this scenario were to come to pass, we would expect Gold to soon break above 950 and move swiftly towards the BIG $1000 station. Gold bugs could be celebrating St Patrick's day wearing Gold instead of Green. With Gold +/- 15 of 1000 by mid March we could expect a reaction back towards the breakout at 936. This reaction would be swift and likely last less than 10 trading days. A hard bounce at 936 at that time could bring Gold thru 1000 to around 1050 early in April, when we might expect one last period of consolidation before we reach our Spring blowoff top sometime in May around 1150.
We can expect plenty of volatility along the way as dem Rat Bastids on the NY COMEX fight tooth and nail to prevent the inevitable rise of Gold thru $1000. They already tossed the kitchen sink at us, and are now left with just sticks and stones, hot air, and imaginary IMF Gold. Do not expect them to go down without putting up something resembling a fight. This mornings mysterious air pocket of deception as I write this, is a perfect example of the games they will play... Ignore the noise, stick to your convictions, and enjoy the ride higher. The Moon is still up there, and Gold has set it's sight well past the Moon. To see where Gold may be headed, please click here to see the latest photos of deep space taken by the Hubble Telescope: http://www.space.com/php/multimedia/imagegallery/igviewer.php?imgid=4588&gid=328&index=0
Leave it to Bob Chapman, The International Forecaster for our quote of the week:
It's not just about the fall of the dollar or the discouragement of foreign investors; it's about finding anyone who can fog a mirror who is willing to buy bonds. Without buyers for bonds, nothing can get financed, and without financial credit, business comes to a screeching halt. And since lower rates, accompanied by rampant growth in M3 money supply, are driving speculation and inflation ever higher as are constant bailouts of insolvent banks and monetizations of repos, bonds cannot help but become less and less attractive as this madness goes on. We could see a complete freeze-up of the entire engine, which drives business finance. The proposed US stimulus package may turn out to be the equivalent of throwing a ping-pong ball at a tiger tank that is about to open up with its 88's.
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