Gold is about to go over $1200 an ounce.

[rickortreat]

Friday April 30th- Gold is now at 1179.3 and has been a bit higher this AM. From a Technical analysis perspective this is significant as the price has breached the upper level of the trading range it's been in since the price collapse after 1230 which was reached in the beginning Dec. 09. 

There may be some slight resistance at this 1180 level, but if so, I would expect it to be slight. The next price target is the old $1230 level and up and away from there.

The Congressional examination of Goldman and their defense is very interesting, and the moves to restrain the non-standard derivatives is a good move, but it does nothing about the existing derivatives on the books that have caused all the problems!  The real story is now southern Europe where Greece's financial problems are now causing investors to look askance at Italy, Spain and Portugal.

The Euro is under serious pressure here, so you won't see a weaker dollar at this time. Gold however is reacting to the increased likelihood of hyperinflation, as all of the Western economies have a very high debt level relative to GDP and the situation is NOT improving. 

Gold is not something that can be manufactured, only realized by honest labor. It's actual scarcity and it's unique qualities separate it from other stores of wealth. It is expensive and somewhat risky to store, and mining stocks should do very well as the POG rises. Even the old-line producers who had sold gold forward have now settled these trades and are now positioned to profit from Gold's rise.

[rickortreat]

May 11th. As expected in my last post 1232.30 is the current price and the first target on the way up. Since it rose nearly 430 today and this is the point of the previous high, we may see some slight hesitation at this price before moving higher.  The current uptrend is quite strong, however, powered as much by the Euro's decline as anything else. Europeans are getting anxious about their money very rapidly and while many still see the Dollar as the best of what's left, a lot of them aren't buying that story either.

Gold is still a no brainer here, we are in a bull market and a major move up.

Nothing has changed enough to alter Gold's trajectory upwards on a fundamental basis. The US economy is not doing well, the number of available homes continues to rise and not enough jobs have been created to save the housing market. State budgets are under enormous financial pressure, and it isn't just California that is having problems. New Jersey might be just as bad.  You can think of these economies as being akin to Greece as it is to the EU.  The EU will have to bail out Greece or say goodbye to the Euro, And the US govt. will have to bail out the states.

Housing has crashed and it's now taking out local banks and undermining the tax base. The best governments are the ones that will reduce spending as much as possible, as the ones with the lowest tax burdens will be the best places to be, all else being equal. It's a good thing that America is the land of plenty and food is relatively cheap. I see no reason to be optimistic that things will change around for business. Wall Street is still playing it's games and unless Govt. makes some of these things illegal, they will destroy the world economic system. That 1,000 point collapse occurred last week still has not been explained, as there was no apparent seminal cause.  All this tells you is that we have hyperactive computer models making the decisions and following the trend. The problem is, it's all herd behavior with no respect for actual value, this means the computers are more apt to get valuations way wrong, on a short-term basis. Everyone is doing technical analysis, without understanding anything about the underlying businesses, that's like flying on instruments alone and not looking out the cockpit window! Computers can execute orders faster, but they can't out-think reality.

[rickortreat]

May 19th. So much for the uptrend! But do not be concerned if you have bought in. In reality nothing has changed, the Euro is still in trouble and the dollar only looks good by comparison. The bottom line is all these countries are running a deficit and tax revenues aren't covering the debt, which means the countries are printing money that is worth less and less. The world economy actually appears to be rolling over as oil is down along with coppper. A recession is not going to help matters, but this appears to be the current trajectory.

All this ties in neatly with my last post about the markets. The hedge funds are all computer model driven and when certain criteria are met they decide to sell, this is what has happened with Gold. It was getting a bit overbought at 1250, but not so much as to justify a dive bellow 1200. People who have been in gold a long time have seen this all before. Sometimes the damage is significant enough to derail the bulls, but the uptrend in Gold and the causes behind it's rise are still acting in the opposite direction.  Part of the problem is that the buyers wanting gold to rise are pussies and the establishment which wants to cap the price and pretend currencies are still worth more than the paper they are printed on are fearless. All that needs to happen is that the buyers of those future contracts take delivery and the game is over. When they sell like this, it's a buying opportunity!  It is a mortal lock that gold will go higher in under these economic conditions. It is the effect of a failing economic/political system. The failure is the cause.

But as a trader there is an old saying, don't try to catch a falling knife! So you wait for the trend to change from it's current downward path. When it gets oversold enough the hedge's will start buying again.

Gold peaked the morning after I made my last post on 5/11. Since then it has been in a downward trend that has broken through all sorts of support. Gold stocks have given up most of the gains they made over the past two to three months. Right now puts are profitable, but you have to watch as now on a short term basis we are waaay oversold. Somewhere there will be a bottom and the bears will have to cover or get gored.  The price is now 1193.80 this should be the last chance to buy Gold below 1200.

[rickortreat]

June 4.  Gold managed to get back over $1200 again, but it is effectively stuck, unable to acquire the momentum necessary to take out the old high, put in last November. 

Do not be concerned by this at all, as all the fundamental aspects for a strong rise in Gold are all in place.  Is the European debt situation getting any better? NO!  Is the US growing again? NO!

When Gold got close to it's former top price, sell orders came in.  The hedge funds are at it again trying to call the top and chase the weak hands out of their positions. The US Dollar only looks good because of the Euro, but the truth is both currencies are based on excessive debt which cannot be serviced as it is far beyond the countries' current GDP's. Markets can get out of balance one way or the other based on the herd following the trend.

Most of the hedge funds use trading programs, which of course embrace Technical Analysis. But TA is not predictive of the future, it is merely a tool for following trends and an objective guide to buy and sell. There are short-term trends and long term ones, of course and the dominant theme in Gold is still up and will continue to be, and the dominant theme for currencies in Europe and the US is down. 

Right now the short term trend is to stay in this range, which means not a lot of opportunities for a trader.  Patience is a virtue here, while waiting for the players in the market to wake up to the reality of the situation.

 

[rickortreat]

Gold got perky today, June 7. It was up over $1240 today before falling back, the top of the range that's been established. Watch carefully here, because this is the line in the sand in Dollar terms for Gold. If you were holding Euro's that battle is already over, Gold is establishing new historical highs there.

There is no guarantee that Gold will go higher here, but my instincts tell me that the demand is too much for the bears to try shorting here. Gold should now start taking off on it's way to the $1600 price level. That does mean dollar inflation folks, so get ready.

[rickortreat]

June 18. Gold got up to 1260 earlier today before falling back to 1257.90.  Summertime is historically weak for gold, which is part of the jewelry cycle. Gold, however, is now trading as a currency and a store of value, since neither the Euro or the US dollar has any credibility that they are.

$1600 probably before the end of this year. Nothing has changed, the economy is a long way from recovering and Europe is in real trouble.  The big secret is that US states are in a similar debt situation and are crying to Uncle Sam.

These governments are out of control, as they insist on spending what they don't have to satisfy special interests. The consequence of spending without revenue is a growth in the money supply in excess of value being created. AKA inflation.

Until now, the US has enjoyed the cover of Europe's bad news. Currency traders will start taking shots at the Dollar before long.