| |
| Gold's Future in Months Ahead
|
|
|
“The best way to predict
the future is to invent it.” –Alan Kay
Gold has been sliding sideways as well as upwards
while it travels through the spring corrective cycle. Prices
do not have to sell they can just as easily move sideways
in a range bound trading pattern. The following charts have
been selected to discuss a few key factors affecting gold
including energy, stocks and currency markets. These graphic
patterns will help us to see coming events and what could
happen with gold.
During the latter part of April and this month
of May gold the metal and gold stocks have been behaving “toppy”
and acting like they want to sell. Yet, gold the metal simply
will not give up and sell as funds, foreign investors, and
larger, well heeled domestic investors begin to recognize
the value of gold versus other choices. We have previously
forecast the corrective period to be this month. Today is
the 9th of May leaving us less than three active trading weeks
to cyclically correct if it is to happen at all. With Memorial
Day observed falling on Monday the 29th, expect nothing of
merit in the markets from May 27th through May 31. June 1-2
falls on Thursday and Friday and this new month start-up might
only provide account churning and adjustments. Expect the
next positive real gold market action after May to begin on
Monday June 5th. The more we study the charts, the more we
think our correction period is over and gold prices should
continue sideways until June when they historically rally
all the way to Thanksgiving.
The summer months are normally stuck in a trading
range and the gold chart below shows us this forecast as well.
Gold traders should remember however, due to faster markets
and more gold interest, the newer gold trading ranges will
be much wider trading in daily $10-$20 moves. Most
markets spend 75-80% of the entire year moving sideways as
this chart predicts from June through September. This summer’s
charted forecast is the same as ours in Trader
Tracks. What this chart does not show us is the explosive
fall rally in gold normally beginning in September.
Gold Price London Fix Rates and Forecast
December 2006 Weekly Gold with Bollinger
Bands on 5-9-06 for Week of 5-12-06
Follow the trend last year from May through
July. Notice the bands are tighter and prices do not vary
much. For 2006, we will get more of the same except
those bands will be wider expressing the wider price ranges
in summer months. In August, 2005 gold’s price
made its rally move continuing right up through January 2006.
When markets have completed extraordinary moves like this
one, volatility increases and latest selling-profit taking
periods are more violent and erratic. Emotions of stock and
metal holders run high and price reactions will also. However,
if we stick to the fundamentals of a gold bull market and
observe our trading rules we will prevail.
Sometimes these major price advances are not
readily apparent. Consider the December 2006 gold chart has
a $704 gold futures price today meaning
we need less than an 18% increase to achieve our forecast
goal of $850 for Thanksgiving. Since gold was priced
at $450 last August, a move to $850 is indeed remarkable.
Further, we find it interesting that gold has produced this
advance behaving as if it were in a stealth market with little
buying help from the general market place. Think about where
this market could go when it is open and observed in the mainstream
of investors. So far gold has moved from $250 to nearly $700
through buying by gold bugs and a handful of professional
investors. Where can it go when the real news is struck by
the light of day?
Silver is sometimes an earlier guide helping
to predict gold’s price. They can differ, but silver
at this date has provided a continuation triangle. This could
mean not much selling but more sideways motion until June
when price can rally, jumping above the triangle apex. At
a triangle ending period, price has to go up or down as the
continuation is completed. Our silver chart with notes is
presented on the following page.
Daily December 2006 Silver Forecasts Time
and Later Year Prices
Notice almost perfect triangle from mid-April
to present price. Silver moves so swiftly, it can sell and
correct and be in a rally before June. It is a strong leading
indicator for gold being a tiny precious metal market prone
to rapid price changes.
Dow Jones Industrial Average Stock Index
Forecast says Selling Ahead
This market cannot be propped up forever.
May is “sell and go away” month. However, manipulation
and artificial supports have kept it near the all time high
index prices. If the Dow cannot sell this month, we expect
a flat, range bound summer with selling in fall which is ordinarily
the heaviest sell period.
Nasdaq 100 Stock Index
Performance and Forecast for 2006.
Just as silver is a forecaster for gold,
the Nasdaq is a leading
indicator for the Dow and other major stock indexes. This
market is
very weak and took another hit on poor Dell Computer news
May 9th.
West Texas Intermediate Crude Oil Price
in U.S. dollars
Energy prices are forecast to climb from
June through late fall 2006.
Iran news cooled a little this week, but fundamentals remain
in place.
There is an annual global shortage of crude oil in the amount
of 2.5mm
barrels. Worse, there is less light, sweet crude available
for unleaded
gasoline production with escalating demand. Next, refinery
capacity is
critical and cannot be satisfied with new facilities for many
years. USA
imports 35% of its unleaded gasoline fully refined from foreign
tankers.
C$ versus US$ exchange rate for 2006
The U.S. Dollar is selling and the Canadian
Dollar’s value is rising.
Almost everything wrong in the USA is going right in Canada.
Canada
has minerals, energy, low debt, strong trade and exports.
It is becoming
more business friendly and has a wealth of new opportunities.
Canada’s
largest problem is lack of labor and they are importing people
from all
over the world for employment in strong, growing industries
and mining.
As other nations become dictatorial with nationalization and
taxes toward
miners, Canada is passing new laws and adjusting old ones
to keep up
with the mining industry growth to promote it and help mining
grow.
Gold’s Predictive Summary
1. Gold should move to our 2006 forecast
high of $850 on growing strength with funds investing larger
cash amounts and public recognition.
2. The next new gold rally historically
and cyclically begins next month.
3. Silver is forecasting a gold rally popping
above a continuation triangle.
4. Dow Jones Stock Index propping cannot
levitate this market forever. If it cannot correct this spring,
it should do so this fall beginning in September.
5. Nasdaq is a leading indicator for all
stock indexes. It is falling faster and will drop the hardest,
selling first in this investment sector.
6. Crude Oil and energy is in a long inflationary
rally with other commodities.
7. All of these facts are conspiring to
rally gold as a growing safe haven for investment upside,
savings, security and replacement for dilutive, fiat currencies,
particularly the United States dollar. -Traderrog
|
