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August 3, 2010

Rumblings in the Gold Market

Hey, strangers. I know the blog has suffered from a dearth of posts in recent weeks, but the response to the Member letter has been fantastic, and I have been scrambling to solidify all the content for subscribers. I promise that once I finish beefing up the Member content... which at the moment involves completing a couple articles for the technical analysis manual... I will post more frequently in the public area. In the meantime, I have opened a third sample member letter for public perusal.

Now a quick display of recent examples of a pattern we've seen in gold throughout this bull...

gold technical analysis

gold technical analysis

gold technical analysis

gold technical analysis

The implications are big for our little yellow friend. Keep in mind that the dollar is due for a major (3-year) cycle low in early 2011. The declines into those lows are typically severe, bringing a sense of depair over the future of our currency. Those declines are also typically accompanied by parabolic moves in precious metals. Note the decline into the last 3-year dollar low:

gold technical analysis

In fact, I suspect the coming 3-year low will be accompanied by not just a sense of panic, but a sense of crisis. Crises usually see a safe-haven flight into the dollar via U.S. Treasuries. However, if the dollar is the problem, where does the safe-haven money flee? Into gold, of course! Now consider that the Treasury market can easily absorb tens of billions of dollars during a panic. However, the precious metals markets... particularly silver... are much thinner. I wonder what will happen to them with all that money trying to crowd in?

 

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