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« Dude, Is That Gold Bar for Real? | Main | Oceanagold Corporation Going Places »
Thursday
Jan212010

Gold and Silver Update

President Obama.JPG

The DOW dropped 213 points today apparently on the back of the President Obama's stated intent to regulate the banks causing the Bank of America, for example, to fall 6.13% shortly afterwards. Is he really going after the banks with a big stick or is this a smoke screen for the dramatic political failure in the state of Massachusetts?

The loss of Massachusetts to the opposition would appear to sink the health care legislation which is a big blow to the President.

Either way the precious metals also took a pounding with both gold and silver dropping significantly. The HUI Index lost 19 points to close at 403 leaving our portfolio covered in red. The dollar closed at 78.38 just below its 200dma and appears to be the place to run to when the stocks sell off. So we now need to watch this situation closely as some of our favourite stocks could present us with buying opportunities and possible options trading opportunities. As we have said many times this is and will continue to be a very volatile ride, with $50/oz to $100/oz up and down days, its a white knuckle ride. The bull will try to throw you off, all we can say is hold onto your core positions and look to take advantage of these dips as they come along with the cash that you have in your trading account. Please don't hit any one idea too hard as it can hit back very hard when we get it wrong.

So back to the charts, stay alert and on your toes we may have to move fast. Do take a look at Agnico-Eagle, Kinross Gold and Silver Standard as they appear to have suffered a tad too much in this sell off.

Gold and silver will of course determine the direction of the stocks so we would like to see them both settle and find support before we pounce on our next trade.

Finally we have this:


A missive we received from Jim Sinclair, if you have the time it is well worth visiting his web site called MineSet, just click here.




Because of paper gold, market games can be played. What cannot be done is for paper gold to produce bullion.
 
The bullies can attack the paper gold market in unison, but they cannot create supply in real bullion with the ease of highly leveraged paper.
 
The pros depend on the under-financed public to stampede under the pressure of fear of loss.
 
Believe me, I used to run the locals (pros) all over the lot, and on occasion I got significant paybacks.
 
However, in the final analysis all we did was add noise to a market that went from $40 to $887.50 Real gold (bullion) is in meagre supply.
 
What that means is algorithms must lose and fundamentals must rule.
 
All the violent trading resulting in ever increasing volatility in the gold price is but manic noise inside of a major uptrend that will make me look bad for having been too conservative in my year 2000 price objective of $1650.
 
If you had lived through a top in the gold market, you would know that without any question whatsoever, this is not it.
 
Ignore those writers who wish to sell a service by feeding on your fear. Gold is going to and through $1224.10 on its way to $1274-$1278. Following that it is on to $1650 and Armstrong and Alf's numbers.
 
Respectfully yours,
Jim


So there you have it.

Got a comment then please add it to this article, all opinions are welcome and appreciated.

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Reader Comments (4)

Hi

Thanks for all the great tips and analysis I receive daily from your organisation. I would be grateful if you could run an update regarding your current thoughts on AUY.

Cheers Hugh

January 22, 2010 | Unregistered CommenterHugh Clyne

Gold is not going to 1600, it is going to 300. People who expect gold to repeat 1980 pattern are going to be wrong, this is not summer, this is kondratieff winter. it is going to be worse than after rebound in 1930, and gold is not any different than the dow or any other financial instrument, it is freely traded (worldwide), tales about manipulation are for newbies only (and religious gold maniacs) There wasn't any better time to short gold than today, technicals are excellent.

January 22, 2010 | Unregistered CommenterDi

So Di, are you shorting gold, we keep asking and you dont answer.

January 22, 2010 | Unregistered CommenterGold Prices

With the amount of debt that is going into default on the country, state and local levels, I don't understand why people think gold is going higher. The amount of debt to deflate is many times more than the money being printed (inflation). Doesn't the bottom need to drop out first before gold and/or silver can go higher?

The derivatives around the globe are 10 times global GDP. Things have to deflate first as no country can print 100s of Trillions of dollars....

January 23, 2010 | Unregistered CommenterLarry

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