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« Randgold Resources Limited: Nice Bounce! | Main | Barrick Gold Corporation: The Predator of 2009! »
Friday
Jan162009

GOLD: Needs a higher High!

Gold Chart 17 Jan 09



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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Reader Comments (9)

Nothing to argue :)

We'll wait and see what happens after Obama pulls the strings for about month or so. Than we are able to assess some of the actions and its possible impact in the US economy and the dollar.

Its vague out there.

January 17, 2009 | Unregistered Commenterde Graaf

Are you getting any inquiries regarding off-market large quantities of gold being brought between $1,000 and $1,100 an ounce between central banks?

Isn't the squeeze on the short sellers on the COMEX going to influence near term prices of gold?

The Perth Mint is unable to keep up with demand. Aren't there other suppliers with the same problem?

Mexico is near collapse. Isn't the USA not far behind?

I can't think of a better time to be buying physical gold.

January 17, 2009 | Unregistered CommenterSonny

Sonny, THAT we don't have to argue about. Its a fact we all agree upon.

Timing is the issue. When and how will gold perform in deteriorating economic circumstances. Inflation is key, and I'm not seeying it anywhere in 2009. Deflation up front, how will gold respond? Golden question!!

We'll just have to wait and see when the smoke clears the balance sheets of the major financial institutions. And I think we have a long way to go for full disclosure and renewed signs for monetary velocity.

brgds.

January 17, 2009 | Unregistered Commenterde Graaf

Looking for a good gold junior company? How about Osisko Mining (OSK)? http://www.osisko.com/en/

The Canadian Malartic gold deposit in Quebec (100% owned)currently has 6.28 million oz. of gold in the proven and probable category, 1.41 million oz. indicated and 720,000 oz, inferred (8.41 million oz. total).

The Barnat Zone, a separate deposit a short distance from the Malartic deposit has returned very good results and a resource calculation is planned for Q1 2009.

As of Nov. 2008 there were 8 drills working in these areas and Osisko is well financed with $120 M in cash.

Quebec, Canada is one of the world's best mining jurisdictions. Osisko gets back something like 42% of exploration costs from the Quebec Government and power costs are quite low.

How many juniors have nearly 10 million oz. of gold in the ground?

January 17, 2009 | Unregistered CommenterGeorge

ooo boy, how hard you guys are going to be beaten when gold hits 550 in march 09. 2200 ? ha! ha! ha! (and i didn't predict this low, Jim Rogers did, i just said when)

January 17, 2009 | Unregistered CommenterDi

In an earlier article I had written on this site, I also cited the possibility of gold around 500.

But Di, I still think, that IF monetary deflation occurs, (which is not logical considering the enormous amounts of dollars being created on the FED's balance sheet to counter it) then we could see the spot price of gold go back to your proposed low. I agree.

But hey, don't you think the FED will drop that bomb of money down the drain right into the economy to moderate that deflationary event in the private sector? Obama has another stimulus package standing by worth 900 billion dollars for Infrastructure, manufacturing and utilities spending...

Thats a lot of inflation.
But both processes take time. Balance sheets are dirty, and will remain that way for some time I guess.

Somewhere beyond 2010, the inflation may turn its head up again if the world economy recovers...a bit. But don't trust me on that one, because its could also be a world depression for half a decade I you ask me.

I and lots of others with me, have lost the oversight. Markets are vague and analysts are running on day by day info. Nobody knows shietttt.

January 17, 2009 | Unregistered Commenterde Graaf

Di,

Why don't you come back at the end of March and let us know what the price of gold is. And come back again at the end of December and let us know again what the price of gold is.

If Jum Rogers said that, than you better have a look at these Jim Rogers interview as he's saying exactly the opposite of what you say he said !!

http://www.youtube.com/watch?v=w84EiCt0Lqk

http://www.youtube.com/watch?v=SMp15ohJCKE

http://www.youtube.com/watch?v=1y8StIdhBXM

January 17, 2009 | Unregistered CommenterGeorge

SANGOLD is the small jewel your looking for.

January 17, 2009 | Unregistered CommenterP

We spotted this in the FT.com:

Gordon Brown told banks to come clean over the extent of their bad assets on Friday, admitting the scale of the banking crisis could threaten the global economy with a new phenomenon: “financial isolationism”.

With speculation growing that the government will be forced to stage another bank rescue, the prime minister told the Financial Times he had been urging the banks for almost a year to write down their bad assets. “One of the necessary elements for the next stage is for people to have a clear understanding that bad assets have been written off,” he said.

This comes as a surprise to us and we imagined that Gordon Brown would be fully aware of each banks situation before making decisions to give financial support to them.

http://www.ft.com/cms/s/0/a72d00b0-e425-11dd-8274-0000779fd2ac.html

January 17, 2009 | Unregistered CommenterGold Prices

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