-- Posted Thursday, 17 September 2009 | Digg This Article
| | Source: GoldSeek.com
Rick’s Picks
Thursday, September 17, 2009
“Phenomenally accurate forecasts”
Here are two numbers to jot down if you’re interested in gold and the U.S. dollar: 75.47 and 72.93. Those are our current downside targets for the NYBOT Dollar Index, and we are quite confident that both will be reached in the fullness of time. The first lies just 1% below yesterday’s settlement price of 76.28; the second, 4.3% below it. Like you, we’ve heard many compelling arguments from dollar bulls and bears. Some think it is about to turn very strong, while others see a collapse. Our gut feeling is that the bulls will be right, and that the dollar will rise because of a deflationary short-squeeze on all who owe dollars. But when push comes to shove, we are perfectly willing to toss everyone’s best arguments out the window – including even our own – and to simply go with the charts. And the charts say, simply, that the dollar will continue lower after a corrective rally from just beneath current levels.
If so, the bearish targets given above would square nicely with our outlook for gold. We’ve been quite bullish on the stuff for a long, long time and have no disagreement with those who believe think bullion’s bull market is still in the warm-up stage. However, our immediate outlook calls for a potentially important top at $1074, basis the December Comex contract. That would imply a rally of about 5% from yesterday’s settlement price of $1020. If this scenario comes to pass, the high in gold would likely coincide with a temporary low in the Dollar Index at the 75.47 target given above.
Buying Opportunity in Gold
And then? We won’t hazard a guess concerning how high the dollar will rally, but we would view it as corrective rather than impulsive. That means gold’s corresponding decline would be corrective as well, making it a buying opportunity for long-term bulls. Once gold’s correction has run its course, we would expect it to rally anew as the Dollar Index resumes its decline, presumably to the 72.93 target. Gold would probably be trading well above $1074 by that time – perhaps around $1300-$400 – but we’ll leave it to the swamis to tell you how exactly high.
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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 © 2009, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Thursday, 17 September 2009 | Digg This Article | Source: GoldSeek.com
