-- Posted Sunday, 10 February 2008 | Digg This Article
| Source: GoldSeek.com
Rick’s Picks
Monday, February 11, 2008
“Phenomenally accurate forecasts”
Gold passed every strength test we could devise last week, ending on an upswing that hints of significantly more upside to come. From a purely technical standpoint, we like the fact that corrections have been routinely reversing at Fibonacci-based supports, and that most of the subsequent rebounds have easily surpassed at least two prior peaks on the hourly chart without pausing for breath. Such rallies are known as “impulse legs” in our Hidden Pivot nomenclature, and the ones that we’ve been seeing in bullion lately have been giving us the confidence to trade and position from the long side even as some well-known gold bulls have been calling for an correction to as low as $750.
We’ll be ready if and when it comes, since no important price reversal can possibly occur without signaling us first on the five- and fifteen-minute charts. When bearish impulse legs start to metastasize for a day or two in this way, that will be our warning to reef the sails. However, so far, gold has shown no signs of weakness, only a heartening eagerness to move higher.
Certain developments have understandably stoked fears that bullion is overdue for a punitive correction. For one, a sharp dive recently in Europe’s economic vital signs appears to be turning the European Central Bank dovish, and that would be bullish for the dollar, at least in theory. And for two, despite extremely aggressive easing by the Fed in recent weeks, the dollar has stood its ground. If it survived such a nasty hit without falling to new lows, the thinking goes, then it must be revving up for a powerful rally. Thus, with two seemingly good reasons for the dollar to strengthen, gold can only go down, right?
Credit-Fairy Skeptics
We don’t think so, and here’s why. In the first place, there is no chance the ECB is going to ease more aggressively than the Fed. Although most American economists evidently believe that easy money is the way back to growth, their European counterparts have never put much store in the credit fairy. Consequently, the ECB could lower administered rates somewhat, but not nearly as much as the Fed. And this means that both the dollar and the euro should continue to cede ground to gold.
Goldbugs who are worried about a rising dollar should keep in mind that when we speak of a “strong” dollar, it is only relative to other currencies, all of which are fundamentally worthless, that it could be so egregiously mischaracterized. In the weeks and months ahead, if the ECB shades toward easing, that could slow the dollar’s decline relative to the euro, but both currencies can only fall relative to gold. Indeed, gold priced in euros has just broken out on the long-term charts. As it gathers strength for an historic push above $1,000, we see little reason for caution.
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Who Needs a Guru?
The Hidden Pivot seminar scheduled for this weekend sold out, so I’ve added an additional session on March 8-9. If you’d like to attend, click here for further details and instructions on how to register. The class will be held on Saturday/Sunday from 9:00 a.m. to 12:30 p.m. Mountain Time. If you want to learn how to forecast stocks and commodities as confidently and precisely as top pros, this is an opportunity you should not pass up.
Oz-Hours Class
I will also be offering a class in February that is tailored to the scheduling needs of students from Australia, New Zealand and Singapore. If you live in Sydney, this seminar will take place on February 21-22 (Thursday and Friday), from 3:30 p.m. to 7 p.m. These hours will also work for early risers in Western Europe. For further details, click here. You can also register directly by clicking here, then on the “Upcoming” tab.
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Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2008, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Sunday, 10 February 2008 | Digg This Article | Source: GoldSeek.com
