|
Gold Hugs Exponential Trend |
 |
 |
 |
|
Written by Administrator
|
|
Tuesday, 29 March 2011 02:38 |
There's plenty of skepticism and hate from the talking heads regarding gold's prospects. It's overdone, they say. The news cycle is calming down now, so the safe-haven isn't needed anymore. The economy is picking up, so dividend-paying and appreciating stocks will take the wind out of gold's sails. Et cetera. Even though I'm a contrarian by nature, and so such remarks should be encouraging, the fact is that it's hard to buck the crowd and stay with fundamentals. So the other sanity check is technicals. Is investor sentiment truly weighing on gold? Doesn't look that way to me! Gold has remained in a 10-year exponential trend and is very tightly hugging that line today. January's low at around $1320 kissed the trend line. March 15th's $1400 did as well. And today's $1420 is still locking lips.
Could the trend fail here? It's certainly possible. But after 10 years very tightly defining this trend, it's hard to believe it would break down now. Despite the talking heads, all the fundamentals driving gold higher remain intact. The fact that we're about to hit the national debt ceiling again is a reminder that fiscal and monetary policies will continue to devalue the Dollar and create ever more demand for a stable alternative store of value.
It is with this in mind that I predict we let go of the trend line for awhile for an adventure toward $1600 before coming home again in the $1500-$1550 zone this summer. It's tough putting predictions in writing given the almost assured probability that you'll be embarrassingly wrong. But I'm reasonably confident there's nowhere to go now but up and probably a significant spike up away from the trend line, at least for a little while. We've been consolidating in this $1400 zone since November now. Everyone who was going to has now taken their profits. Buyers will now overwhelm sellers for awhile until everyone fears, yet again, that the top is in, and we correct back to the trend line. It's the bull market dance.
If the trend remains intact, and at this point there is every indication it will, then by November we'll be to $1700 at minimum and end the year near or above $1800. Again, that's at minimum. If we had a move proportional to the 2005-2006 rally or the 2007-2008 rally, we could go to $2200 this year. It's clear blue skies to the upside, with only the Moon in sight.
|
|
Last Updated ( Thursday, 16 June 2011 01:17 )
|
