Monday, September 27, 2010

Gold Setting Up For A Big Move Higher

Gold and silver have had a big price run since the beginning of August.  I'm not prepared to argue that gold will move higher from here without some kind of corrective pullback or sideways consolidation.  In fact, I would argue that this would be healthy way for the market to set up another big price run during the 4th quarter.

From a fundamental perspective, the seasonal demand for gold in India will play a big factor in supporting higher gold prices. It is apparent that India has adjusted to these higher prices and has been aggressively buying gold on any price dips.  This is somewhat contrary to its buying behavior since the gold bull began, in which Indian buying disappeared on big moves higher and did not re-emerge until big price corrections.  As such, I wanted to post a comment by a reader from India:
There is Deepavali approching, a festival of lights, celebrated for Victory of Good over Evil. So it is considered to be auspicious (as per Hindu mythology) to buy PM's during this time. By the way Deepavali is celebrated in Thailand, Indonesia, Malaysia, Vietnam etc moreover all over south-east-asia region. Even Whitehouse is celebrating Deepavali from last few years. Would they buy Gold? ; )

Let's hope this physical buying could bring in end to price manipulation by the Bullion banks.

I consider Gartman, Soros, Nadler, Jeff Cristian, all are linked (to the right places) players. Take the case of Soros, No one has balls to take on a central bank like Bank of England, without insider knowledge. I can even put Berkshire into this league, did you see the rant by Munger recently? They all feed on their connections in right places.

On a lighter note, let everyone in the world celebrate Deepavali, buy into PM's hand over fist during this time and bring an end to the evil designs.

From India
The Indians are paying attention to the corrupt market manipulation of the western bulllion banks.  And the surge in individual wealth there is fueling India's huge appetite for gold and silver.

In addition to Indian buying, it looks like Vietnam is once again going to become a factor in the physical gold market.  Local market premiums went positive last night after being quite negative since late July.  There have been media reports of accelerating price inflation in Vietnam plus a growing distrust of the U.S. dollar, to which the local Vietnamese currency, the dong, is pegged.  As JB commented today regarding the Vietnamese gold market:  " will be remembered that high Vietnamese premiums preceded the world gold rise of last Fall."

I want to end by posting the latest and highly regarded 5x3 point and figure chart of gold published by

(click on chart to enlarge)

Per my commentary earlier, this chart shows the likelihood of some degree of price pullback/correction. But it's hard to imagine a chart looking any more bullish that this.


  1. Looks like cartel backed by taxpayer will suffer some big losses from options today. They are not potent as before even on expiry day. Now i tend to believe things really started to move.

  2. This is the second op-ex in a row where we did not get significant downside price action. All we need do now is to break through the 2% cap rule on a regular basis and this is when we will really know the Gold Cartel is on the ropes.

    Joe M.