The Golden Truth: Is Gold Getting Ready To Launch?

Monday, August 31, 2009

Is Gold Getting Ready To Launch?

As you can see from the chart posted, the price of gold has been "coiling" into an ever-tighter pennant formation. This technical formation can often lead to a substantial upside breakouts.

(click on chart to enlarge)

We are now entering into what is historically the best seasonal period of the year for the price of gold and mining stocks. It looks like the European Central Banks are largely done dumping their citizens' gold, which will only add to the very tight market conditions. India, historically the largest gold buying country in the world (China recently surpassed India) is entering into its biggest gold buying time of the year. It is in the autumn in which Indian farmers tend to invest their profits into gold. An even bigger component is the gold buying which occurs for Indian weddings, which tend to happen during the festivals in October and November. It is estimated that 40% of Indian gold demand occurs during the autumn.

Finally, in what can be seen as incredibly bullish for the price of gold, the Central Central Fund of Canada (CEF) just filed a prospectus filing for periodic share offerings up to $1 billion. CEF issues stock and then uses the proceeds to buy gold and silver bars, which CEF holds in trust. Unlike GLD, which refuses to show the world whether or not it really holds the gold it supposedly buys with shareholder money, CEF will accomodate any visitor who would like to view the CEF vault with their own eyes. CEF is seeing enormous demand for their shares from big funds, but typically only issues shares when the stock trades around 15% above the value of the underlying gold and silver in the trust. This filing is HUGELY bullish.

Keep an eye on the $960 and $980 price levels. If you wait until gold breaks over $1000, you might find yourself waiting for a pullback that never comes.

4 comments:

EconomicDisconnectMonday, 31 August, 2009
This is old information, but worth a look anyways:
http://www.marketskeptics.com/2009/08/us-exported-5000-metric-tonnes-of-gold.html
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Dave in DenverMonday, 31 August, 2009
Thanks for linking that gyc. Hopefully people who read the blog post and check the comments will pull up that link and learn more about what's really going on.

I believe the U.S. gold reserves are substantially either sold or leased out.
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EconomicDisconnectMonday, 31 August, 2009
Scary stuff, I would love more clarification on that export data. Strange metals day, silver strong all day but Gold had to climb back from a rough early session. I am watching Gold $980 and Silver $15 as breakout zones. Great blog.
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Dave in DenverMonday, 31 August, 2009
gyc: thanks for the feedback.

if you do search on "Ron Kirby gold" you will find articles he's written on the subject matter. Kirby was actually the first person to point out this data. I'm pretty sure some of his work on this has been posted at www.financialsense.com
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Why Gold?

Gold is the world's oldest currency. You exchange your fiat currency (dollars, euros, yen, yuan) into gold as an insurance policy against catastrophic Central Bank and Government policies which serve to destroy the value of fiat currencies and destroy democracy.

Gold can ONLY be considered an investment to the extent that it remains significantly and historically undervalued in relation to the fiat currencies against which its value is measured. Otherwise it remains the world's oldest currency and is completely free from the counterparty risk associated with currency by Government fiat (i.e. fiat currencies rely on a Government's "full faith and credit.")

Quote Of The Month Courtesy of "Jesse"

Unfortunately for Larry Summers, Ben Bernanke, and their friends at the BIS, they have not yet figured out how to print physical gold, silver, and other essential commodities, and the world is reaching the point where it might simply start ignoring the New York based markets with respect to essential commodities such as basic materials, oil, foodstuffs, and the like, as they become increasingly irrelevant, fraudulent, and Orwellian. And then where will the financial engineers be, except with no more excuses and no place to hide?

Here is the link to his entire commentary, well worth a read:

http://jessescrossroadscafe.blogspot.com/2010/07/gold-daily-chart-shock-and-awe-for.html

Great Quote From Jim Rogers On Govt CPI Reporting

JR: I mean, we have inflation now. If you go to the shop, whether it’s groceries, or education or insurance or health care, prices are going up for everything. The government lies about it in the US. Some countries lie, many countries don’t: Australia, China, India and Norway. Many countries don’t lie about it and acknowledge that we have inflation. Others lie about it, the UK and the US, but if you go shopping you know prices are up.

Q: Are you saying that the American Consumer Price Index (CPI) published by the US Bureau of Labor Statistics is a lie?

JR: In my opinion, yes, of course it is. Have you looked at it? They’ve changed their accounting several times in the past few decades. When housing was 20% to 25% of the CPI and housing was going up, they didn’t count it, saying rents weren’t going up, and then when home prices started going down, they counted it. It’s the same with many things. It’s staggering some of the tortuous reasoning that the BLS has used over the past 25 or 30 years. When the price of gasoline goes up, they say it’s not really going up because it’s better gasoline, better quality, therefore you’re getting more for your money. I mean, it’s endless, the stuff that they say and for some reason people sit there, although more and more people are catching on, and accept what the government says.

source: www.clusterstock.com

Quote of the Week

"The primary function of a Central Bank is to engage in the massive transfer of wealth from the middle class to the wealthy elite. The Federal Reserve was set up to do this with the blessing and support of Congress." - Dave in Denver

If you refuse to believe the above, please read "The Creature From Jekyll Island: A Second Look at the Federal Reserve" by G. Edward Griffin and then explain to me why the Senate voted down the Vitter Amendment and Congress refuses to pass a law requiring a full audit of the Fed, even though the Fed is using taxpayer-backed money to bailout Wall Street and Europe.