Latest Headlines

Search

-- Posted Tuesday, 3 March 2009 | Digg This Article | Source: GoldSeek.com

Rick’s Picks

Tuesday, March 3, 2009

“Phenomenally accurate forecasts”

Global markets verging on collapse dragged bullion lower yesterday, but not by much. While Comex April Gold finished down 1.4%, the Dow’s lost three times as much, falling 300 points on the day, or 4.2%.  Rick’s Picks subscribers managed to dodge the bullet with a short position in the Gold Miners ETF (GDX) that has gained 50% since we acquired it last week. (Click here for a detailed explanation of the risk-averse option strategy that we used.)  Anyone feeling disappointed over gold’s sullenness in recent days should contemplate the carnage in any of a dozen other investment classes. The Dow for instance. It is now trading 52% below the 14198 record high reached in October 2007. Compare that to gold, which even after the sharp selloff of the last few days is still within 12% of its all-time high, $1050, recorded almost exactly a year ago.

From a technical standpoint, the thing to notice about gold is that the rally spike to $1007 a few weeks ago exceeded a key high at $1005 made back in July. The $2 overshoot may not seem like much, but according to the Hidden Pivot Method that we use to forecast trends and price swings, it is enough to all but guarantee that the current bout of weakness in gold (and silver) will give way to another strong leg up. Gold’s primacy as an investment asset should be in-your-face obvious to all by then, since it will be establishing a base above $1000 at the same time the Dow Industrials are hitting ten-year lows.

Mass Psychosis

Under the circumstances, bullion investors have good reason to be patient. It was foreseeable that Gold would get knocked down when it briefly poked above $1000 a couple of weeks ago. (For the record, we sent the following heads-up to subscribers before the spike: “On a breakout [above $1000], beware of a possible stall at 1006.10, since that's as high as we can project for the very near term using the weekly chart.’]  The subsequent selloff in gold was due in part to the dog-and-pony show that starred our Fed chairman and the President. For a few days, with Bernanke talking about inflation being under control, and Obama stumping for WPA II, the average CNBC viewer might have gotten the impression that our leaders had things under control. We did not expect this state of mass psychosis to persist for long; nor did it. But the stock market’s latest, nasty decline has sapped the pool of investable funds that might conceivably have been deployed in gold, and with it the energy that money managers will require to panic into gold. They will make this leap to redemption eventually, if only to save their necks and not their souls.

In the meantime, we should savor the fact that gold is still a relative bargain compared to just about every other asset class in which one could shelter his or her savings.

***

Rick's Picks publishes a daily trading newsletter for gold, stock, commodity, and mini-index traders 240 times per year. 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 © 2009, Rick Ackerman. All Rights Reserved. www.rickackerman.com 

-- Posted Tuesday, 3 March 2009 | Digg This Article | Source: GoldSeek.com

Previous Articles by Rick Ackerman

© 1995 - 2009

Disclaimer