In the most recent article I published on SeekingAlpha, I used the phrase gold is a generational buying opportunity. This was written in the context of my own generation, when President Nixon took the U.S. Dollar off the gold standard in 1971. This was a generation ago and the U.S. dollar has collapsed more than 98% since.
After more than 30 years since the ban was lifted off the gold standard, the government printing presses continue their policies to create as much paper money or fiat currency as necessary. The initial measure was initiated to support the U.S. dollar demand and status as the world reserve currency. Since then, all goods and services have been priced in dollar denominated terms globally.
Unfortunately, when these policies were implemented there was no real fundamental understanding of the long-term inflationary implications of debasing currency over time. We are only beginning to see the real impact of this destructive monetary policy implemented more than 30 years later.
One hundred thousand dollars. Since the 1980's, the magical "six-figure" salary has been a benchmark for financial success. Not too long ago, that income often meant two nice cars in the garage of a large house, fun family vacations and plenty of money left over to save for retirement and college tuition.
But times have changed. Not only has standard inflation steadily eroded the real value of a $100,000 income, but the costs of housing, health insurance and college tuition have risen dramatically in recent years. Consider the rising costs of food, energy and the necessities of a middle class life, and that six-figure luxury quickly turns to six-figure mediocrity.
Less than 20 percent of American households even break the six figures. But many who earn incomes near the mark find that their prized incomes don't take them as far as the hype. Many say that while breaking the $100,000 annual income mark may still be an impressive milestone, it doesn't exactly roll out the red carpet. It seems that things are going to get more expensive as the U.S. dollar inevitably will have major competition as the world reserve currency and the world begins to export inflation back to the U.S economy as the beneficiary. Very few major class assets are offering a generational buying opportunity to preserve its purchasing power. The wealth generation, protection and preservation aspects that gold as a long-term investment offers at current levels is a lifetime opportunity!
When we take a look at the long-term secular bull market in gold, we can clearly see the bottom took place around $275 per ounce in 2001, exactly 30 years later. This is what some cyclical analysts identify as the 30 year cycle bottom. Since then, gold has risen more than 600% as of November 2, 2012 at the closing price of $1,711, in just 11 years.
Let's take a look at the technical picture in gold and silver and see what the near-term price forecast looks like. The December (Comex) electronic gold contract closed at 1678.8. The 52 week Range is: 1535 - 1815. The market closing below the daily 9, 18 and 36 day MA's on a weekly basis is confirmation that the trend momentum is bearish.
With the market closing below the VC Weekly Price Momentum Indicator of 1689, this confirms the price momentum is bearish. If long, look to take some profits as we reach the 1703 and 1731 levels early next week. If stops are taken out here, we could see a rally up to the 1708 and 1727 weekly resistance levels. Buy corrections at the 1661 and 1647 levels to cover shorts and go long on a weekly reversal stop. If long, use the 1647 level as a SCO/GTC ( Stop Close Only and Good Till Cancelled order).
The December (Comex) electronic silver contract closed at 30.857. The 52 week Range is: 26.215 - 37.65. The market closing below the daily 9, 18 and 36 day MA's on a weekly basis is confirmation that the trend momentum is bearish.
With the market closing below the VC Weekly Price Momentum Indicator of 31.35, this confirms the price momentum is bearish. Look to take some profits if long as we reach the 31.87 to 32.90 levels early next week. If stops are taken out here, we could see a rally up to the 32 to 33.51 weekly resistance levels. Buy corrections at the 30.33 and 29.80 levels to cover shorts and go long on a weekly reversal stop. If long, use the 29.80 level as a SCO/GTC ( Stop Close Only and Good Till Cancelled order).
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Additional disclosure: TRADING DERIVATIVES, FINANCIAL INSTRUMENTS AND PRECIOUS METALS INVOLVES SIGNIFICANT RISK OF LOSS AND IS NOT SUITABLE FOR EVERYONE. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.