Gold went over $632 today.

[rickortreat]

Gold' s continued strength continues to encourage the holding of stock and futures contracts.  With Gold up another $13.40 today, it is impossible to conclude this rally is over.  Gold is still well within it's uptrend channel and could conceivably go as high as $660 without hitting that upper trend as I draw the chart.

Even so, a little perspective is in order.  The interim low, which started this whole rally occurred in June last year at a price of 413.85, with the previous high being $456.87 in December of 2004.  Since then, the price rise has accellerated going higher in ever shorter periods of time, until we now have extreme price rises like $18 and $20 dollars a day.  As I am writing this. Gold has gone over $635.00!

FYI: Gold's day ends at  1:30 est and starts again at 2:00 est. So when I talk about a day's price rise I'm refereing to the action from yesterday at 4:00 to 4:00 today.

At any rate this rise is unprecedented in recent times and is remenicent of the last time Gold exploded in 1980.  We are still in the early part of this move.  Considering the excessive creation of money that has occurred since that time, a price above $1600 is more than reasonable.  We are well below half that now.

I would not advise chasing the market now.  I could be wrong but this rise is so rapid that ths can only go on for a few days without some sort of retracement.  There appears to be so much froth to the market that a correction at some point is inevitable. The longer the delay before a correction, the more severe it is likely to be.  

We had corrections at $541 down to $489.90 and then from $575.35 down to $535.11 Jeez, since I started writing this the price has gone up another $5 to $638!  This means the recent rally has gone up over $100.00 without a significant retrace.

The smart move would be to wait until gold bottoms again, perhaps at the $585 level  (a 50% retracement)  If you are in, stay in, but put trailing stops on your stocks and consider lightening your postion.  Pigs get slaugtered, eventually.  

Aye Carrumba! $639!  This implies $660 is in the bag.  Stay tuned.... :up:  

[rickortreat]

Well yesterday Gold dropped dramatically from an overnight tick of 645 all the way down to 610.  The rise and fall happened so quickly most miners didn't even have a chance to digest the move.

We're all the way back to $627 now, this was more of a move to save the butts of all the people who were trying to sell short.  Today is options expiry, and if they still had to honor their short contracts they would have been belly up.  You can bet they all took advantage of yesterday's dive to cover, which is why  we've already recovered.

From a TA standpoint, Gold is still in an uptrend.  

[Reality]

Well yesterday Gold dropped dramatically from an overnight tick of 645 all the way down to 610.  The rise and fall happened so quickly most miners didn't even have a chance to digest the move.

We're all the way back to $627 now, this was more of a move to save the butts of all the people who were trying to sell short.  Today is options expiry, and if they still had to honor their short contracts they would have been belly up.  You can bet they all took advantage of yesterday's dive to cover, which is why  we've already recovered.

From a TA standpoint, Gold is still in an uptrend.

From a TA standpoint, Gold is still in an uptrend.

So now what?  Whats the latest?

[rickortreat]

Still all in, and still making money.  

Gold is now working off it's oversold condition, not by going down in price, but by not going up quite so rapidly.

We're now flirting with $640 again and that seems to be a reasonable price for the time being.  

I think everyone, longs and shorts alike are in something of a state of shock.  Gold ramped up very quickly from $600 and everyone is wondering what happens next.  I think we will remain in a range between $630 and $645 until something happens outside the gold market.

An increase in violence in the mid east, a sudden problem with oil supplies from the production end, or a war will send Gold upward very quickly.  Outside of that, we're in a little bit of a holding pattern here.

I don't see any indication of a sell-off, odds are higher that the price will rise.

The Dollar continues to fall and fail, that alone is enough to keep gold going up.

The Dollar is priced as an index against other curencies, and it has been falling badly.  The Dollar bottom last year in December, and had been in an uptrend until March 7th of this year when it started rolling over.  The bottom was 80.39 and the last low was 87.83, in January.  This is the first time we've broken below that 87.83 mark since, and today we are at 87.27.  The next support level is at 86.02, and it looks like that will get taken out.

Apart from simple trend lines, there are patterns that appear over and over in charts that imply future price moves.  One of the most common is called a "head and shoulders pattern, which is a series of three humps with the one in the middle the larger of the three.  When expereinced chartists see this pattern, they pay attention and watch carefully.  Typically the price target is derived by taking the difference between the neckline and the peak price and subtracting that from the neckline to get the bottom target.  

Assuming this pattern confirms we have a price target of 81.30 on the US index.  If it goes below there, we'll start talking about $1,000 gold.

Incidentally it is the dollar decline that is at least part of the problem for oil prices.  Inflation is finally here, and affecting everyone.  

Now that people are getting hurt by inflation, politicians are starting to make noise, but aren't doing anything substantive yet.  When they do, we'll have to see what it is to make a change in how we specualate on the markets....
 

[Gold update]

Currently, Gold is above $650 which is a new 20 yr. high.  Previously, I had said Gold was in a trading range between $630 and $645.

If we close above $645 today, we're off to the races again with price targets in the $665 range and $685 comming up next.

Thought the consolidation, which was at a new high range, miners merely worked off their oversold condition, and at no time did any of them give a sell signal.  They will now start moving higher in lock-step with Gold itself.

GG is now at $35 a share.  

[rickortreat]

Another update:

Gold continues on it's tear upwards, as I predicted in my last post.  We are currently at $665.30.

What is driving gold up?  The same thing that's driving all the commodities up, the dollar.

The money in your pocket is worth less and less by the day, because the government spends too damn much of it, without taxing you enough to cover the spending.  So instead of taxing you, they inflate it out of your paycheck!  

The Dollar is in free-fall now, heading lower, the lowest point on a 25 yr, Dollar chart is at around.80 on the index.  Last Wednesday it was 87.5 and was higher than that previously.  Today we're at 85.74 this is about as ugly as a chart ever gets!

At some point our trading partners will start screaming and try to stem the fall.  The problem is they never let the rebalacing process occurr, so the US can earn it's own way in the world.  They insist on being able to keep their currencies lower so they can do the work and sell to us!  Now, however, reality is starting to kick all of us in the butt!  Rising commodity prices affect all finished goods, and squeeze the producers.  It is getting harder and harder for China to turn a profit.  I mention China specifically since they do not allow their currency to float in a free market.

It's important to understand that every countries self-serving policies are at the root of this financial crises.  It is very difficult to protect yourself from this type of insititutionalized ignorance.  It is what caused the first great depression.  And, it looks like it's comming around again.

 

[rickortreat]

Another update:  We were at $665.30 only 3 days ago, and here we are at $682.40.

I still haven't sold my stocks, but some others have which has muted their rise somewhat.  The reason is that this is a fibonnaci level and some believe that gold will now retreat after such a rapid rise.

From a strict TA standpoint, however this is not correct, a rising market is a rising market, and no one knows when or where it will end.  There is no reason that Gold can't top $700 before the end of this month.

The Japs tried jawboning to stop the dollar slide and it didn't help for more than a day.  The fact is the dollar broke previous support at 85.50, and is now at 85.10.  I see a possible bounce point at 84.71, but that is simply a technical matter and not support. For that we have to go down to $83.36 and that is only a minor level that may mean nothing.  Long term bottom support, and I'm talking over a year ago was at 80.39.  

Going below that indicates a sea change for the future status of the US global centric economy.

It is my personal opinion that the US Governent and the Fed, in concert with our trading partners who are now our creditors finally realize that the US has to be able to earn it's way out of debt, rather than to keep supporting the dollar and loaning us money.  I have no idea where a real free-market equilibrium will be, but their intent is to have it unwind slowly to give everyone a chance to adapt. The dollar won't hit bottom until our exports equal or exceed our imports and the US goverment stops printing money and spending more than they take in in taxes.

Gold is headed over $1000, but I am unsure as to when.  If you are inclined to learn to trade, you may, but if you just want to park your retirement money in a safe place, simply wait for a swoon in gold and buy USERX and UNWPX, two mutual funds which are invested in mining stocls and have doubled for me in less than a year.   In this way you can take a postion in harmony with the decline in the dollar.  This is free advice and I am not an investment counselor or advisor.  Whatever you decide to do, is entirely up to you, as are the consequences of your choices.


 

[rickortreat]

Gold went over $700 today.  I can't give any sound advice, because I've never expericed a market like it.  I don't know where or when it will correct, but it must simply because nothing goes straight up forever.

I will start lightening my postion, not because I think it will go down, but because I want to lock in some profit, even if it means forgoing an even greater profit.  Bulls and Bears get fed; Pigs get slaughtered.

If you are in, consider taking some profits soon.  If you aren't in, wait for a correction and then get in.  No one should be without some type of a position in gold and or silver now.  

[rickortreat]

Gold continues higher, but the shares are lagging a bit.  This simply means that some people are taking my advice and taking profits, which I have NOT yet done, because Gold keeps rising and, IMO, it will pull up the shares enough to make it worthwhile to stay in.

In fact, many shares have not accounted for the higher gold price in their stocks.  This may mean that there is something wrong with those stocks, such as a derrivative short of gold contract backing the financing of their loan.  

At any rate Gold rose to a new 25 yr. high today of $725.90.  It is rising so strongly that it is remenicent of the 78-80 period in Gold.  All the metals are rising as are commodities like oil.  This is inflation being factored in, and it isn't pretty.  It means rising prices for what you buy.

The manner of it's rise will make predicting tops and bottoms quite difficult.  I would suggest buying stocks with fairly tight trailing stops to protect your investment.  But with everything going on it makes more sense to be in than out.

 

[rickortreat]

After hitting $720 last night, Gold tumbled today to $680.  This has been characteristic of this market, once it broke above $500.  It will rise very sharply and give little or no sign of loosing momentum and then- bam back down- but never as low as the previous low before.

This week should be the week to pick up gold shares cheap and go long, although we may see some additional weakness first.  

As one might expect, the Dollar was up today, but it is litterally what is know as a dead-cat bounce.  Nothing has changed fundamentally, so the long-term trend of the dollar being down continues, and the long-term uptrend of Gold continues.

 

[rickortreat]

Already we're seeing a rebound in price in Gold.  back up to 689.  There are cheap stocks out there well worth picking up if one is willing to be patient.  GG was over $40 and is now at 33.33, and was as low as 31.96.

Naturally, I took a big hit over the last few days on paper, but will probably be back where I was within a few weeks, if not sooner.    

[rickortreat]

This is becoming a regular thing, having to update the price of gold.  It used to be nice and sedate, not too much of a move to fast, interupted by some violent corrections.

Well. after being jammed down to $680, we're back up to $699.10 and it's only 8 PM est.

If you didn't buy your gold shares today- not necessarilly a good thing since most were down slightly- get ready to buy first thing tomorrow.

Unfortunately, the Dollar, is not performing well enough to keep Gold or Copper down for long.

Here's a link to a US Dollar chart, about the ugliest thing you'd ever want to own.  If it were a stock, the chart would say sell.  Since it's what's in your wallet, you'll have to figure out what to do with them.

I am in to Gold and other equities as I can be without using any leverage or margin.

Maybe the dollar will find some support a bit lower than here, but you better wait until you see it before keeping your money there.

[rickortreat]

Well. it looks like Gold has bottomed already, at $635 today.  Note how this corresponds to the price of this thread's title!

Price resistance becomes support in an uptrending bull market like Gold.

Now looks to be the time to buy.  Silver has an ETF that should do very well, and the gold stocks have been driven down to very low levels.  

[rickortreat]

After ramping up to $670 gold was again knocked back down to below $640.  Naturally, Gold stocks sold off, but this only gives you a chance to get in at even better prices.

Note that Gold is already back up to 642.20 in the after-hours market.

Gold cannot be kept down for long, as it is the anti-dollar, or anti-fiat currency.  Understand that money is only good if it works as a store of value.  A paper currency backed by nothing that is produced in excess of productive capacity is NOT a safe store of value.  It is a monetary system designed to fail, since politicians have no integrity and will continue to print rather than raise taxes or cut spending.

Gold will head over $1000 before the end of the year, unless Europe and the US sell off their gold reserves.  If they do, get yours before it's gone.  Once they are out of the markets, meaning they don't have significant reserves, it will be game over.  As it is the Gold ETF now holds more gold than most central banks.

In the meantime the stock market is looking very bad, and it would be wise to move into a cash postion and out of equities for the time being.