Chart courtesy of StockCharts.com
As noted on the chart above 2008 was characterised by a string of the lower 'highs' and lower lows placing gold into a short-term down channel. From mid-October gold has put in a tremendous rally to close at $842.40 today, however, what gold needs to do now is establish a higher high by beating the last high of $892.00 and reverse this mini down trend.
We were heartened by Friday’s performance but one good day is not enough and we want to see gold push on from here. Could it happen you ask? Well there are a myriad of considerations to be taken into account but we would put the performance of the US Dollar close to the top of the list. It has been on a rally of its own recently up from 78 to 84 on the US Dollar index. Whenever we think the flight to cash is over we are hit by more bad news from the financial sector. This week we have had the Bank of America putting the begging bowl out and on Friday afternoon the stock of Barclays Bank lost a whopping 25%! What does next week hold in store for us? More of the same we suspect. Volatility will be the order of the day and gold will bounce around accordingly.
On the brighter side we have read a number of writers who are even more bullish on gold than they were last year. Some of the forecasts for 2009 put gold oscillating between $750/oz and $2200/oz. We are as bullish as ever and anticipate gold making a new all time high this year, but being honest about predictions we also thought that gold would finish 2008 at $1000/oz, so we missed the target completely. This year is going to consist of a lot more hard work before committing funds to one particular mining stock. We would like to unearth a real jewel of a small company with a brilliant future but we are not convinced by the popular mantra of junior stocks and for now we may stick with the larger quality miners.
Disagree – good! Let us know why please.
Stay tuned for updates in this fast moving market…
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