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Chalk up Another Win for the Gold Bulls!
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Those of us who have been expecting gold to break out above the $1125 level, and who have maintained our long positions despite warnings from the negative nabobs who are still calling for gold to drop below $1000.00, are now watching the gold bears frantically cover their short positions.
Thankfully we were able to convince our subscribers to pay no attention to the bears and to hold onto gold and silver bullion and mining stocks since the fundamentals are clearly in our favor.
Here are some charts that helped us to disregard the urgings of those who predicted lower gold prices. Charts courtesy Stockcharts.com
Featured is the daily gold chart. Price rose above the downtrend line on March 2nd thereby confirming the bottom at $1044. The fact that price did not need to touch the 200DMA for energy is bullish. The RSI and MACD were at support levels when gold bottomed on day 44 of the pullback, and these supporting indicators are currently positive (green lines). Our unique ‘Gold Direction Indicator’ registered 72% on Monday March 1st, up from 67% on Friday Feb. 26th and 61% on Thursday Feb 25th.
The 50DMA is in positive alignment to the 200DMA (green oval). We first drew your attention to this positive development in articles we wrote back in June and July of last year (See archives). The target for this breakout is $1200.
Featured is the index that compares gold to long bonds. It represents the struggle between ‘paper and stuff’. The higher this index rises the more bond holders will be persuaded to sell and use the proceeds to buy gold. Count on it! The importance of this index cannot be overstated. Back in October we alerted you to the importance of the breakout at 8.50. We indicated that the target for that breakout was at 11.50. The rise is on course towards the 11.50 target. That 11.50 target coincides with gold rising to $1,350.00!
Featured is the gold price in Euros. Price has just broken out from a bullish ‘cup with handle’ formation and closed at a new all time high. The direction is upward and the supporting indicators are positive (green lines). The 50DMA is in positive alignment to the 200DMA (green oval). The fact that gold is bullish in Euros, in Canadian dollars, in Australian dollars, in British Pounds, in Swiss Francs etc. proves that this current gold bull in more than a vote of non-confidence in the US dollar. It is a vote of distrust in fiat currencies. While there will always be short-term interruptions in the rise, the main trend is very bullish!
Featured is the daily silver chart. The uptrend that began after the credit crisis of Q4/08 is well established (blue lines). Price fell below the 200DMA in early February but it is now back above it and is challenging the horizontal resistance at 17.00. A breakout at the blue arrow sets up a quick rise to the previous tops. The supporting indicators are positive (green lines). The 50DMA is in positive alignment to the 200DMA (green oval).
Featured is the energy for the ongoing bull market in gold. (Chart courtesy Federal Reserve Bank of St. Louis). The US Federal Reserve continues to add money to the banking system and while the banks are not loaning it out to businesses and individuals, they are making it available to government, and the bureaucrats are spending money like drunken sailors.
Back in the late 1970’s Mr. James Blanchard warned us at his annual New Orleans convention, about the federal deficits which totaled several hundred billion dollars. The implication was that these were ‘gold-bullish’. This wisdom applied to today’s unprecedented deficits makes higher gold prices a ‘slam dunk.
Peter Degraaf is an on-line stock trader with more than 50 years of investing experience. He sends out a weekend report to his many subscribers. For a recent copy send him an E-mail (itiswell@cogeco.net). At his website www.pdegraaf.com are many interesting free features: ‘The stock pick of the week’, ‘The making of a successful investor’, ‘Long term charts’ and many other articles.
Happy trading!
Peter Degraaf
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Peter Degraaf is an online stock trader with over 50 years of investing experience. He publishes a weekend report for his many subscribers. For a sample copy send him an E-mail at itiswell@cogeco.net or visit his website www.pdegraaf.com and check out the ‘Stock Pick of the Week’.
DISCLAIMER: Please do your own due diligence. Investing involves taking chances. I am NOT responsible for your investment decisions.
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