LIVE Gold Prices $  | E-Mail Subscriptions | Update GoldSeek | GoldSeek Radio 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

Price Extremes, The Trapped Fed and Scapegoats
By: Gary Christenson, The Deviant Investor

SWOT Analysis: Barrick Raises Its Dividend 40 Percent
By: Frank Holmes, US Funds

Widening Bid-Ask Spreads
By: Keith Weiner, Monetary Metals

Positive Action in the Gold Complex
By: Rambus

Precious Metals Update Video: Gold has had the highest close in years
By: Ira Epstein

Asian Metals Market Update: Feb-19-2020
By: Chintan Karnani, Insignia Consultants

Gold on the Verge of a Breakout (video update)
By: Gary Savage

Technical Scoop: Tireless melt-up, COVID-19 immunity, same themes, inconsequential debt, Greek yields, foreboding spread
By: David Chapman

Baltic Dry, Copper, Oil, Tech and China Continue to Call for Market Crash Soon...
By: Clive Maund

Gold Is Getting Ready For Its Next Breakout
By: Avi Gilburt

 
Search

GoldSeek Web

 
Summer Lows At Hand?

By: Mary Anne Aden and Pamela Aden, The Aden Forecast


-- Posted Thursday, 21 June 2012 | | Disqus

In a key turnaround, gold bounced up from its December lows this month on fresh safe haven buying as QE3 possibilities came back to the table.

 

The psychological $1600 level was quickly surpassed. This is essentially the level that will determine if 2012 ends up being the 12th consecutive up year for gold.

 

For now, we are seeing some backing and filling, which isnít a bad thing... as long as the December lows hold. This is currently a very important juncture for gold, and for silver.

 

HELP ON THE WAY?

 

When Europe or the U.S. looks vulnerable, especially in the jobs area, it quickly fuels emotions. And we all know how Bernanke feels about this... he will save the system at all costs. In fact, all of the monetary policy makers worldwide are being pressured to help the ailing global economy.

 

This is why the markets bounced up after their sell-off. A liquidity infusion would be bullish for gold.

 

BIG PICTURE IS BULLISH

 

The big picture continues to point the way up. And the global debt crisis and record low interest rates are a bullish factor for gold too.

 

                 

 

Chart 1 shows this clearly. It shows the gold price above, with the ďrealĒ T-Bill interest rate below since 1967.

 

When the real T-Bill rate is negative (below zero on the chart) it means that rates are providing a negative return, adjusted for inflation.

 

This is bullish for gold because thereís no competition. Normally, an investment that pays a higher interest has the advantage. But if interest rates arenít paying interest, and neither does gold, then there is no advantage between the two.

 

Note that the two major bull markets in gold happened while real interest rates were mostly negative.

 

Even though gold peaked in September and itís been declining for nine months, the gold trend is still up, regardless of the currency itís traded in.

 

Plus, gold has been stronger than the other precious metals and gold shares, especially since last year when Europe started flaring up.

 

Another good sign for gold has been its underlying strength as the U.S. dollar has moved higher.  Gold held above its December low, for instance, when the dollar index soared to an almost two year high.  This type of situation tends to lead a renewed gold rise.

 

Demand also remains bullish. Central banks continue to be active buyers. They bought bullion at the fastest pace in five decades in 2011, and theyíll likely purchase a similar amount this year, according to the World Gold Council. In fact, central banks continued buying during weakness this past month.

 

GOLD TIMING: At key juncture

 

Goldís downward correction since September is now taking longer than it did in 2008.

The 2008 decline from March to November was steeper and gold lost almost 30%.  The current decline has been mild in comparison, losing nearly 20%.

 

Chart 2 shows this comparison. Since the 2008 decline was the worst one in the 11 year old bull market, it again reinforces the importance of last Decemberís low. This low is key.  If it holds, all is well.

 

      

 

If it doesnít and gold breaks clearly below $1536 for a few days, we could see gold fall much further first, before a renewed rise again starts. A 30% decline, similar to 2008 for example, could take gold to the $1350 - $1400 level.

 

For now, so far so good. Plus, as you can see on Chart 2B, gold is near a D low area, indicating that gold is close to a low. But we must also be prepared for a possible final washout, in case it comes.

To refresh your memories, gold has moved in an impressive recurring pattern on an intermediate basis.  In a bull market its best rise is what we call a ĎCí rise when gold reaches new bull market highs.

 

The worst decline is called a ĎDĒ decline, which is where gold is today... forming a double ĎDí bottom.  And itís why weíre watching the December lows so closely.

 

Bear markets tend to start with D declines and if this low is clearly broken, it would be a bad sign.

 

Once the ĎDí decline is over, however, the upcoming A & B moves tend to be a consolidation time, before another C rise takes off.  So stay tuned.

 

ON THE UPSIDE: Keep an eye on...

 

Most important is that gold stays above $1536, the December low.

 

Then once it rises and stays above its 65-week moving average at $1635, it will be in bullish territory. Gold could then rise to its next resistance at the $1700 level.

 

From there, the next hurdle will be the $1800 level. This will be a harder one to surpass because itís kept a lid on the weakness since November.

 

But once it does, gold could then jump up to its record high near $1900. And itíll be smooth sailing, in another leg up in this amazing bull market when new record highs are reached.

 

And when $2000 is eventually surpassed, itíll likely be THE level that causes an exploding bull market to take hold.

 

--

Mary Anne & Pamela Aden are well known analysts and editors of The Aden Forecast, a market newsletter named 2010 Letter of the Year by MarketWatch, which provides specific forecasts and recommendations on gold, stocks, interest rates and the other major markets. For more information, go to www.adenforecast.com

 


-- Posted Thursday, 21 June 2012 | Digg This Article | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2019



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer


Map

The views contained here may not represent the views of GoldSeek.com, Gold Seek LLC, its affiliates or advertisers. GoldSeek.com, Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, Gold Seek LLC, is strictly prohibited. In no event shall GoldSeek.com, Gold Seek LLC or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.