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February 22, 2009

Midas at Work

With its tag of $1000 per ounce this week, gold has completed a huge basing pattern that began with the March '08 top. I am going to be approaching the precious metals market now with two working assumptions: 1) this base will resolve higher as part of a typical springtime blow-off rally which gold and silver have experienced nearly every year of the bull market, and 2) silver, as usual, will greatly outperform gold during the second half of the run.

gold chart

The question of how to build a position... for those of us getting into the action late... depends on how one expects the base to resolve. First, we must take a step back to see how we got to this point. To this end, I have put together a modest slideshow for your viewing amusement:

Recent price action for gold


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