Thursday, July 10, 2008

Gold Moving Higher

Today gold had a nice move to the upside making a 2 month high. As you know I've been bullish on gold since June 24th based on several technical factors. I think we'll see new highs for the year in this metal so I'm going to sit tight with my long position. My protective stop is not right below the June 25th low.


Richard said...

Thanks for the chart.

You entered gold at just the right time.

Trading in the two mortgage GSEs, Fannie Mae and Freddie Mac today, relates that these GSEs are toast; they are both now history; definitely zombie corporations, that is soulless, capital-eating monsters that are dragging the entire stock market lower.

As the reality of insolvency sets in, and the bond market place sees Freddie Mac's, FRE, and Fannie Mae's, FNM, stock value going more towards zero; and as it senses that these two are going to be nationalized in some way, with real estate debt transferred over to the US taxpayer, then four things will happen:

First, the debt sectors will will sell off heavily in the stock market; these sectors will lead the stock market lower: REM, KCE, KBE, IYR, and RWR.

Second, there will be run on US Treasury bonds. The bond market place independent of Federal Reserve action will declare a defacto interest rate hike on US government bonds. The interest rate on the 30 year US Treasury, $TYX, and the 10 year US Treasury, $TNX, will rise. The Treasuries will sell off as seen in the Treasury ETF, TLT, and the zero coupon mutual bond fund BTTRX, falling lower.

Third, There will be a run on the US Dollar, $USD: The dollar will quickly and awesomely loose value: it will rapidly fall through 72.

Fourth, the investment demand for gold, $GOLD, will increase. Gold will continue its outbreak which was documented in the chart of gold by Alf Field in his article 'Elliott Wave Gold Update 20', where gold broke out on June 25, 2008 from $870.

Your chart today indicates gold is indeed going up.

It hit strong resistance today; over the long term it is going substantially and awesomely higher.

Kevin said...

Hi Richard..

Thanks for taking the time to write such a detailed commentary...Very interesting.


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