Seeking Alpha

Cliff Wachtel's  Instablog

Cliff Wachtel
Send Message
Cliff Wachtel, CPA, is currently the Director of Market Research, New Media and Training for Caesartrade.com, a fast growing forex and CFD broker. He covers a variety of topics including global market drivers, forex, currency hedged and diversified income investing, and is currently working on a... More
My company:
THE SENSIBLE GUIDE TO FOREX
My blog:
THE SENSIBLE GUIDE TO FOREX
My book:
The Sensible Guide To Forex: Safer, Smarter Ways To Survive & Prosper From The Start
  • COMING GOLD BREAKOUT COURTESY OF EU, US INCOMPETENCE & HOW TO PROFIT 0 comments
    Sep 14, 2011 3:54 AM | about stocks: UUP, UDN, FXE, ERO, URR, ULE, EUO, DRR, FXA, FXB, FXC, FXD, FXF, FXEN, FXY, JYF, AUNZ, CYB, GLD, CNY, USO, DUG, USL, NBO, DBV, ICI, CEW, SLV, OIL, SPY, SDS, RSW, BXDC, SPXU, SH, DIA, EWC, EWA, TLT, XHB, ITM, IGOV, VGK, TBT, GSG, DBC, CORN, ICN, SZR, BZF, GRU, DAX-OLD, FRC, DB, SAN, BNO, ENI

    The coming days may be your last chance to get gold before $2000 /oz becomes a fond memory.

     

    From both a fundamental and technical perspective, gold looks ready to break out. Of course, the recent modest pullback has once again brought out the warnings that gold is a bubble. However these are typically based on sentiment or momentum indicators, which don’t mean a lot when the long term fundamentals behind a move remain strong and in place, as we’ll discuss below.

     

     

    Technical Picture For Gold

     

    On the daily charts, gold has formed a classic pennant pattern comprised of lower highs and higher lows, indicating the balance of power between buyers and sellers is becoming even.

     

    ScreenHunter 01 Sep 14 09 49  Coming Gold Breakout Courtesy Of EU, US Incompetence & How To Profit

    GOLD DAILY CHART COURTESY ANYOPTION.COM     01sept 14 0949

     

     

     

     

    After gold’s recent burst higher in early-mid August, some pullback would be expected, however, as the pennant pattern shows, while gold’s been falling modestly on normal profit taking, buyers have been stepping back in at higher levels. We also note that the 20 day EMA (yellow) has generally been a support zone since at least February 2011 with few brief exceptions.  In general a pennant is a continuation pattern, meaning gold could be getting ready for its next move higher.

     

    Certainly the fundamentals exists to create more of the kind of ongoing anxiety about both the USD and EUR that has been driving gold higher for years. Remember, gold is neither a safe haven nor risk asset in the classic sense. Rather it’s a currency hedge, particularly against declines in the two most widely held currencies, the USD and EUR. See here for more on the myths and facts about what drives gold.

     

    Here’s a quick review of what’s likely to continue demand for such hedges in the coming weeks.

     

     

    Fundamental Picture For Gold

     

    Longer term the fundamentals that have powered gold higher remain

     

    There are rising risks of more potentially currency devaluing stimulus in both the US and EU (elsewhere too, but flight from the USD and EUR is what’s been driving gold).

     

    IN THE EU

     

    Either a new round of cash for Greece or Greek default should add fuel to the flight out of the EUR over the coming months, though in the short term we could see brief EUR rallies as markets jump around on rumors.

     

    IN THE US

     

     

    TO VIEW THE REST OF THIS ARTICLE PLEASE VISIT http://globalmarkets.anyoption.com AND FIND ARTICLE BY SAME NAME UNDER THE SPECIAL REPORT TAB

     

     

     

    DISCLOSURE /DISCLAIMER: THE ABOVE IS FOR INFORMATIONAL PURPOSES ONLY, RESPONSIBILITY FOR ALL TRADING DECISIONS LIES SOLELY WITH THE READER. IF WE REALLY KNEW WHAT WOULD HAPPEN, WE WOULDN’T BE TELLING YOU FOR FREE, NOW WOULD WE? 

     

Back To Cliff Wachtel's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.