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« What the Heck Is Going on with China? | Main | Gold Outlook: Price Explosion or Downturn »
Thursday
Sep102009

Gold to Punch its Weight

USD Chart 11 Sep 09.JPG


As we can see from the above chart the US Dollar is doing an impression of a Walt Disney Cat sliding down a smooth wall into the great unknown. The two mice, gold and silver look on in anticipation of a bigger fall. We are at a critical juncture whereby gold needs to punch its weight and go through $1033 level demonstrating that it is really going places.

Silver appears to be anticipating golds upward move and is performing very well indeed as seen by the ever reducing ratio of gold to silver, which currently stands at 59 down from around 85.



The HUI is also on the move and now stands at 418.86 up from 310 just a couple months ago. The gold and silver producers have been lagging behind the metals for some time but now appear to have seen the light as demonstrated by the sudden spike upwards in stock prices and the dramatic increase in the volumes of shares traded, which bodes well for the future.

Back to the US Dollar, we can see that the RSI is at 33.68 so there is still room for it to fall further. A further devaluation of the dollar is golds cue to make a record breaking move firstly to $1007 and then $1033 and above.

Once the new high has been made the Internet will propel the news to all corners of the planet. The speed of communication is one of the key differences between this bull market and the one of the early eighties. In 1980 it could take three days for The Wall Street Journal to get to our office in Den Haag, the capital city of The Netherlands. Today you can sit on a beach with a laptop and know what is going in New York, London, Sydney and Stockton-on-Tees. We can also trade at the press of a button, these two factors will add to the increase in volatility as trigger happy traders do their best to maximize profits.

The day will soon be upon us when gold moves $100/oz in a single trading session, so you have been warned. If you are in deep and of a nervous disposition try decaf.

Taking a quick look at the silver prices chart we can see just how well silver has performed recently. The 50dma and the 200dma are moving in parallel in a northerly direction adding support to silvers progress. A spanner in the works could be the RSI which is nudging '80' and suggests that silver is now overbought. However both gold and silver are now a 'dollar' play and should the dollar fall then the charts will be sidelined by the fundamental issues, albeit for a short time period.

Silver chart 11 sep 09.JPG


The chart for gold prices is similar to that of silver as we can see, so we now wait in great expectancy of a major move north.

Gold chart 11 Sep 09.JPG

Have a sparkling day.

Your thoughts are of course most welcome.

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Reader Comments (11)

It is the age of technology. I am travelling and got your terrific report on my Iphone. I would like to say that it makes me a better trader, but I still have a long way to go. Your reports sure are helpful. Many thanks.
John

September 11, 2009 | Unregistered CommenterJohn Ell

John,

You have made our day, many thanks indeed for your kind words.
Having closed the week above $1000/oz is very encouraging, hold on to your hat it will be a white knuckle ride.

September 11, 2009 | Unregistered CommenterGold Prices

Always look forward to all the posts...informative !!

September 12, 2009 | Unregistered CommenterBonnie

HELLO! Exciting indeed! I have been with you traders for some time now ( over a year)and have benefited greatly from your insights at certain times in the gold/silver runs. THANK YOU!! I trade mostly following volumes and stochastic s, so your commentary has been brilliant at times ,in my humble opinion). Gold closed above $1000.00 has great implications...but I worry about possibly one more slam down pullback to the break out near $950.The 50dma is there, and the C.O.T. report shows those "heavy hitters" are still very short ( they never seem to get it wrong, but we'll see)my core position remains in place! What do you all make of the c.o.t readings?? thank you again!!!

September 12, 2009 | Unregistered CommenterRobert

The heavy hitters are short 29 million ounces. Please know I am a gold bull, but how will JP fair if the price stays where it is. It is too close to 3x trading day in Sept. Played the spike up in Randgold, 100%. Tried the anticipated move down with a very small position and I am losing. PE ratio is very high and an AK 47 pointed in the wrong direction, in Africa, will bring it down to 40 a share. My core positions are in near term production projects in Canada. What do you think of CMB.V. I have an article from 1980. Basically it states the fact that near term juniors are the best bet in an up market. Thanx for your great site.

September 12, 2009 | Unregistered CommenterRick Nielsen

Rick,

Understand your play on Randgold as the chart looks ripe for a pull back, the stock price is way above the 200dma and the RSI is currently at 72.12. However gold appears to be ready to rally and if it does the stocks will move with it rendering them even more overbought than they are now. This could well present us with an opportunity to buy a few PUTS but we will wait and see for now.

September 13, 2009 | Unregistered CommenterGold Prices

Rick,

CMB.V, CMC Metals Limited, a market cap of $10m, the stock price has been moving up of late, but we dont know enough about it to form an opinion, maybe some of our readers can chip in with their knowledge of this company.

September 13, 2009 | Unregistered CommenterGold Prices

Robert,

Yes the heavy hitters are still short so the COT position is still a worry that gold will have to climb.

September 13, 2009 | Unregistered CommenterGold Prices

Dear Bob,

The Hague is the seat of our government and Amsterdam is the capital city of the Netherlands. Just to keep you from upsetting people in Holland.

Regards,

September 15, 2009 | Unregistered CommenterMartin

On behalf of all the readers of your informative and objective Kitco commentaries,

Thank you. Sincerely,T

September 15, 2009 | Unregistered CommenterT

The USD is still struggling to hang on in there, yesterday it was trading above the '77' mark and now its wobbling around the 76.087! Gold closed at $1014 in NYC but is slowly moving up in Sydney and stands at $1017 at the mo.

September 22, 2009 | Unregistered CommenterGold Prices

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