Gold Editorials & Commentary

Historically, bear market rallies have lasted 18 to 21 days on average and we have just finished that cycle late in the week. Will history rhyme this time? I think Mark Twain may have it nailed this time.

GLD - sell signal this week.

Last Friday I said we should be looking for a short-correction because the CVI (Climactic Volume Oscillator) was very overbought, and prices were approaching overhead resistance.

It is evident to all the US economic environment is an unmitigated disaster. In fact we seem to be hell bent for leather falling into another Great Depression (the recent Bear Market Rally in Wall Street notwithstanding).

MAJOR GLOBAL TURNING POINT

Last week all three resources pulled back after posted gains the week before. This week will be interesting with gold trading at support, silver just above and oil looking like its going to come down and test support as well.

I believe that the fundamentals for gold stocks are widely misunderstood. The current environment we are in is wildly bullish for gold stocks. This is not because of inflation, but because of deflation.

Gold bounces off support again today with some indicators pointing to much higher prices.

GLD Gold ETF Fund - Daily Trading Chart

A crisis of global confidence in the USDollar is upon us. Foreigners have begun to lose respect for USGovt approach to problem solving, for US bank administration, and for USDollar custodial management.

PART 1: IT'S SIMPLE MATH

Since 2005 we have shared our thoughts regarding our expectations of how the markets might move in this current large cycle.

People everywhere are depressed and confused. Their depression is due to their net worth being severely lacerated and their confusion arises as a result of not knowing what to do next.

The next gold bull market could be just around the corner and with thought in mind; it has many traders and investors on edge, because they are worried they could get left behind.

March 20, 2009 -- I've written in the past that if you want to make 'BIG' money in the market, you have to take an over-sized position and be dead right on the trend. The last time I did that was in late-1958. I was very bullish on the market at that time.

It seems the dead cat bounce may now be behind us as the US markets resumed their decline late in the week after testing important breakdown levels.

Last week a very dangerous precedent was set when the Fed announced that it is going to start overtly intervening to backstop the ailing Treasury market. The market's verdict on this announcement was immediate and unequivocal.

On Wednesday, March 18, another handsome gift was delivered by the Fed to the bond bulls.

The party was good while it lasted or at least that is what we thought.

GLD - buy signal this week.

TORTURE

What a crazy day! The Fed's announced plans to buy long-term Treasury bonds and increase its purchases of mortgage backed securities today sending everything higher except the US dollar which plummeted nearly 3% Wednesday.

You may have heard the old saying that "the Market is the news", and it is true.

USTREASURY BONDS AS COMPETITOR FOR GOLD

As of the close yesterday (and actually before then), the 50 year returns for holding physical gold are much higher than the 50 year returns for the Dow Jones Industrial Average.

I've heard more than a few pundits question an investment in gold or gold stocks in the current environment. They point to deflation and the lack of inflation in the foreseeable future as reasons why precious metals should be avoided.

Market analysts, investment newsletter writers and financial planners are always commenting on how well, or poorly, the precious metals (read gold) mining sector is doing based on how a particular gold/silver mining index is trending but they are not telling yo

This analyst has been watching the markets in the past couple of weeks with a fascination akin to that associated with watching a snake charmer in action.

The week finally saw a bounce from the past many weeks of declines. It wasn't so much that good news rallied markets, rather a lack of bad news for a change.