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| Gold's Future in Months Ahead
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“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
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