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InvestBaboo
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Casual investor with a flair for investing.
  • US$, Gold and Silver - Charts Say... 2 comments
    Jun 8, 2009 8:42 PM

    The US$ is going down - no doubt about this.

    Gold and Silver will climb. Mining stocks are strong.

    As I have noted in my profile I made a staggering return of 80%-plus on my trading account in 2008 by primarily trading Gold and Gold mining stocks. I will tell you though that it took a lot of shaking and baking before I could book these gains. Unlike anything else I trade I find that Gold can break through multiple support levels and still look strong on the charts! The price/action momentum when Gold breaks down is what you need to watch and if there isn't sufficient momentum in a decline then Gold almost always turns right back up.

    While the charts over the last couple of days don't look pretty at first glance there are no confirmed sell signal on Gold or any of the mining stocks. The US$ rally must end for Gold to continue its journey north. If US$ rally continues and gets stronger then we will see sell signals appear on Gold charts. However, in the second half of action today the US$ did show sings of a slowdown which hopefully will mean the rally is fading and the previous decline trend will continue.

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  • Vincent Serpico
    , contributor
    Comment (1) | Send Message
     
    Maybe I am oversimplifying things… but if we continue in a deflationary trend, won’t the dollar continue its rally based on the “there’s nothing better out there” theory? If so, Gold and Silver can see a decline before we enter an inflationary period and see a real, sustainable Gold rally.
    12 Jun 2009, 07:09 PM Reply Like
  • InvestBaboo
    , contributor
    Comments (229) | Send Message
     
    Author’s reply » Vincent:

     

    Two things with respect to the dollar. First, the charts. A definite downtrend. Second, the fundamentals. With debt to GDP ratio now set to exceed 78% the dollar will come under severe pressure. Remember, there is still 2 trillion dollars in debt to be issued by the treasury. Your point on the safe haven was applicable in March of this year when gates to hell seemed to have opened. Now that the markets are (relatively) stable the safe haven appeal has reduced.

     

    Now on to Gold - the charts have exhibited some heavy stress but not a sell signal yet. I am expecting that Gold will hit its low this Monday or Tuesday before resuming its climb. Gold is a hedge against a falling dollar and also rising inflation. Gold and Silver are essential components of a well diversified portfolio.
    14 Jun 2009, 11:35 AM Reply Like
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