CRB Index Spike Lifts GoldOver the long term, the global financial crisis will probably push gold thousands of dollars higher. In the shorter term, rising commodity prices are gold's best friend.
The corn chart has turned into a "flagpole". Rising crop prices cause rising food prices at the supermarket.
Please click here now. You are looking at the weather forecast for a section of America's corn belt. The situation is dire.
Crops grown on lower-grade soils are already almost completely ruined. Many farmers are calling it the worst drought since 1954.
It's not just corn prices that are rising, and it's not just in America. Please click here now. One of my subscribers lives in the heart of Russia's wheat belt, and this morning he confirms the situation described by Reuter's News is real.
Wheat is a key food crop, and prices are rising rapidly. It's only a matter of time before bread prices in the store begin soaring.
The entire CRB index is racing higher. For a longer term view, please see below.
Note the HSR (horizontal resistance & support) at about 293.
Take a look at the position of some of the technical indicators that I've circled. While the CRB index and its components are likely to encounter some selling in the 293 area, the "technical table is set" to create an enormous rally.
I think it is very likely that the highs at 370 will be challenged. Most importantly, a large CRB index rally could be the catalyst that blasts gold up and out of its 10 month "super-wedge" consolidation pattern.
Note the 6 examples of buy signals generated by the 14,7,7 series Stochastics oscillator. The "hook" shape on the current turn looks extremely strong.
The gold community has had to endure a substantial amount of pain over the past 10 months, but that situation appears to be coming to an end very quickly.
Here's a closer look at the gold chart:
Note the flag-like pattern that has formed. The price movement isn't quite vertical enough to call this a full flag, but it is still very bullish.
Friday is "jobs report day". Gold can gyrate wildly in the days leading up to the release of that report. Note the HSR present at about $1590.
If there is a sell-off, I would expect strong buying to occur in the $1575-$1590 area, but you need to be mentally prepared to handle anything that happens. Overall, the short-term gold chart looks very bullish.
I refer to silver as gold's wild little brother. Early this morning, the silver price burst over the downtrend line.
The number of bullish price events that are occurring in most commodity markets is good news for silver fans, because silver has consistently tracked the gold price throughout this crisis.
I don't think that you should try to choose between owning gold and silver. Own both metals, but own more gold. Own silver to seek great reward, and own gold to manage risk.
Oil is the largest component in most commodity indexes. A strong rally in oil can cause those indexes to show huge spikes in price.
Recently, investors became fairly bearish about oil. Oil fell from $112 to about $77. That kind of "price sale" has to be bought.
I would urge you to try to look beyond the bearish analysis that has dominated energy markets, and entertain the possibility that oil is poised to move back towards $100. Such a move could act as a gold price accelerant.
Rising commodity indexes and a rising gold price have the potential to create a junior gold stock price spike too. The growing global drought could be a game-changer for most resource investors. The GDXJ chart seems to indicate that's the most likely scenario.
Note the bullish green wedge pattern that I've highlighted on the GDXJ chart. At the bottom of that wedge there is some "double bottoming action". If GDXJ can climb over $22.50, it could be argued that a breakout has occurred. Such a move would also take GDXJ up and out of the wedge pattern. That could trigger tremendous buying by momentum-oriented investors.
I would book light profits in the $25, $27, and $32 price areas, but I think the theme in play needs to be "sell like a bird". Hold the bulk of your position for a move towards $42!
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Stewart Thomson is no longer an investment advisor. The information provided by Stewart and Graceland Updates is for general information purposes only. Before taking any action on any investment, it is imperative that you consult with multiple properly licensed, experienced and qualifed investment advisors and get numerous opinions before taking any action. Your minimum risk on any investment in the world is: 100% loss of all your money. You may be taking or preparing to take leveraged positions in investments and not know it, exposing yourself to unlimited risks. This is highly concerning if you are an investor in any derivatives products. There is an approx $700 trillion OTC Derivatives Iceberg with a tiny portion written off officially. The bottom line:
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