The Gold market rallied as it should to the interest rate decisions of the Federal Reserve. Some uncertainty did exist as markets could not answer an important question. Were Bailout Boys, Bernanke and Mishkin, intentionally devaluing the dollar or simply inept? In any event, the collapse of the Bernanke dollar sent $Gold to a high above $840 in first week in November. At that level, $Gold was clearly over bought and a dearth of buyers developed. The U.S. dollar had became over sold, and a transitory period of calm was due. As that happened, $Gold extended the correction to almost $70. Will a buy signal develop in $Gold this week? Will a correction extend beyond that signal, as it did in 2006 when funds and momentum traders bulled Gold and then fled?  Will unwinding of leverage and portfolio risk by fund managers push $Gold further down than we expect? With Gold in a structural bull market, over sold periods are important as they provide an opportunity to buy low, and hold for higher.

GOLD THOUGHTS are from Ned W. Schmidt,CFA,CEBS, publisher of The Value View Gold Report, monthly, and Trading Thoughts, weekly.

For a subscription go to http://home.att.net/~nwschmidt/Order_Gold_EMonthlyTT.html

-- Posted Wednesday, 21 November 2007 | Digg This Article