Rumblings in the Gold Market
August 3, 2010

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...

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:

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?