Gold – The American Idol Winner

June 29, 2008
Thirdeyeopentrades entered the precious metals market in 2003. We were a bit late, having missed the bottom, but better late than never. Joe Q. Public is nowhere near this market. In fact, when asked what we do from time to time, we reply “speculate on the movement in the price in gold and mining stocks”. A number of folks reply that it’s not a good place to be and we’re often asked if we know that gold went to below $300 and ounce.

In other words, anyone who bought the last top is petrified of going back in. The general public is still far from the market. Many coin dealers agree with that conclusion.

The dollar is doomed so long as politicians continue to spend money we don’t have and Central Bankers continue to inflate the money supply. Ron Paul said it best earlier this year:

“Market forces should determine interest rates. It’s the distortion of interest rates by manipulating the money supply that causes these (financial) bubbles to occur.”

There’s your US Dollar chart. Monday should be quite interesting as the dollar’s sitting on another precipice. Our price target is 68 once support is broken. The 100 day simple moving average has been providing resistance for the buck for quite some time.

The HUI index of miners has once again turned bullish last week when the Federal Reserve declined to increase interest rates. It’s unknown if a consolidation like 2006’s will now ensue or if a much more forceful rise in price is at the doorstep.

Gold has followed the 65 week simple moving average as support since the beginning of the bull market. We suspect that the low for 2008 was made in April. Our next target for gold is $1200 which is likely to occur this year or next.

The train appears to be leaving the station, and we doubt you’ll find Gold Eagles under $925 ever again. If we’re wrong on that and gold holds its 65 week simple moving average then it would be a supreme gift.

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The volume of all the gold ever mined can occupy a cube 63 feet on each side.