Tuesday, Mar 25, 2008
Gold buying opportunity
Market Oracle: Gold Dramatic Correction Back into Buying Territory
Gold is back in buying territory after its dramatic correction back to key intermediate trendline support
Posted by sold 2 rent 1 @ 10:59 AM (1065 views) Add Comment
12 Comments
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1. harold said...
Yes, but beware:
http://www.kitco.com/ind/nichols/mar242008.html
2. sold 2 rent 1 said...
QUOTE at the end of the article
"There has been some speculation in recent days that the reason why gold and silver fell so heavily last week was that a part of the rapidly dismembered carcass of Bear Sterns was a large gold position that got dumped onto the market. This may be possible but it seems far-fetched. What is more believable is that Bear Sterns may have been scapegoated because it went its own way and didn't play ball with the other big players on the block and is believed to have been heavily shorting the dollar."
"So it was scuttled and JP Morgan, a major shareholder in a private corporation called the Federal Reserve, which just happens to have a lot of influence on the US economy, was granted first rights of salvage, the name of the game being to cherry pick the assets and farm the debts and trash off onto the taxpayer. The JP Morgan elite must feel like the islanders on that Scottish island Eriskay when a boat crammed full with crates of whisky was shipwrecked and washed onto the rocks, which story inspired a highly amusing film called Whisky Galore . "
3. Tezza said...
Quoting article:
"While the correction in gold and silver was an accident waiting to happen, on account of their being extremely overbought with record levels of bullish sentiment, it appears to have been exacerbated,"
So despite this sudden fall being an accident waiting to happen, they then bill this as a buying opportunity? This is faulty logic as there is likely to be a correction again when the price returns.
4. sold 2 rent 1 said...
harold,
Thanks for Kitco post by David Nichols.
I see he is using Martin Armstrong's March 22 low point too.
For those who don't know, March 22 is a turning point in the Global Economic Index, but we don't know what actual index it shows up in.
http://web.archive.org/web/20051030100225/www.armstrongdefensefund.org/martypei/buscycle.htm
In summary David Nichols thinks it is a gold peak turning point.
IMHO, the driver for the gold sell-off last week was the USD index surging. I think the Martin Armstrong turning point on March 22 was in the USD index.
So if the USD index has now turned and will head north for a while what does this mean for gold? This gold bull has been running for 7 years and has been strongly inversely correlated with the USD….that is until now. I think what we will see in this turning point is the dislocation of the gold price with the USD. If you read all the free articles on zealllc.com, they talk about this too.
But how can the USD surge when the economy is tanking and money supply surging too? Easy. The euro makes up 57pc of the USD index. All it takes is for the ECB to cuts IRs and the Euroland countries to start slowing down sharply, and the money will stop poring into the single currency.
So if the euro stops being the safehaven from the USD, where does money flow to?
I am saying gold. We have yet to have the Elliott wave 5 blow-off super spike.
It will be an interesting 2-3 months.
5. techieman said...
S2r1 - the chart to me (EUR / $ look like a pullback from the final leg up in the Eur) with GBP/Eur - looks the same. The GBP / USD looked like a high of 211 then a fall 193, retrace to 204 (around 61.1%) then a fall and (now) another retrace, am hoping the 204 holds or actually 203 as thats where i am short. The Armstrong model looks Nearly on the money (move up in the Dow was a bit before, move up in Housing starts was last week etc.) I would expect a topping pattern in the Euro though and possibly defence by the Central banks of the 1.60 level. But i agree if we have not had the Euro top we are very close. Dont think Mr T is gonna cut the rate but i do agree am no longer a $ (or a £ for that matter, although not to the same extent) bear after a final blip up in the Euro.
6. techieman said...
As for Gold I'm really not too sure that the correction is enough. A move up to the 960-970 followed by a fall to 850 would look right to me (and then perhaps to new highs) , but then again we may have the spike as you say first. Having said that i thought there would be some support at 950 on the way down! - So much for that!
7. happyrenterz said...
Won't be the first time banks get consolidated during a financial crisis. But Bear Stearns was one of the worst offenders in subprime lending so its demise is a good thing.
The gold sell-off was mirrored by agriculture and other metals so I don't buy the Bear Stearns gold stash story. Personally I think it was profit taking and traders meeting margin calls after the Bear S collapse. If another bank fails soon gold might go down to $850. Margin calls mean traders have to sell everything to raise cash.
8. Debtfree said...
from the kitco article link
"This correction will ultimately give us a chance to absolutely load up on gold at much lower levels, ahead of the next huge rally. So it can be a good thing, and not something you have to endure."
nothing to wrorry about.
9. financial planner said...
Not even close. Below 825 and ideally below 800.
10. techieman said...
Why so fp?
11. sold 2 rent 1 said...
techieman,
I think fp thinks
- Elliott wave 5 in gold has been done.
- The avoidance of the financial collapse will cause the USD to rally and commodities (including gold) to tumble.
I diasgree.
Gold stocks never reached their blow-off levels like they did in the uplegs of 2004 and 2006. In fact gold/silver stocks relative to gold (Gold:$XAU) are as undervalued now as back in August 2007 when this whole upleg started.
The HUI (now at 440) needs to reach at least 650 to be anyway overbought.
12. techieman said...
Tezza who ever said markets were logical? Folks on this site have been predicting a sell off as the market was full of bullish rhetoric and overbought (particularly at the 1032 level), in any case the issue now is has the complete bull move finalised or is there some more upside. Either way there was likely to be support at 900 and a retracement back towards the top. I believe this retracement from the downmove will go further then stall and go below 900. Others think not.