Gold, Is $1,528 the Bottom?

May 17, 2012 Market Updates, Politics, Predictions No Comments

$1,528, or there about, should be the bottom in this correction. If gold breaks that support for three days or more, Katie bar the door because the elevator is going down. Let me fess up here, I never saw this retest of the $1,528 support coming. If I had, I would have sold 75% of all of my positions three months ago.That is what markets are all about, knowing in advance when trends are about to change. Unfortunately in the gold market, there are too many manipulators out there with deep pockets that can change the game when there is no logical reason for it to change.

Let’s take a look at what is going on in the world today and see if there is anything that would indicate a risk off situation as the media and the gold price is indicating. Greece is very close to abandoning the Euro and the only thing that would quickly stop their departure would be a massive infusion of cash coming from Germany. That is not likely to happen. The more likely solution will come from the European Central Bank, the ECB, which will find a way to keep Greece away from bankruptcy’s door and keep the Euro members intact.

The EU finance ministers have only one viable option left if they are going to keep the Euro together. They will have to devalue the Euro in order to lessen the debt burden. “Quantitative Easing” will be fully implemented with the Euro because the European leaders have seen 10 out of 17 leaders removed from office in the past year, by socialists that refuse to accept any austerity programs that have been offered to counter Greece’s financial problems.

Unfortunately, while delaying the inevitable, the process also destroys the currency. The European Central Bank, can print Euros so that Greece, Portugal, Spain and the rest can service their debts with cheaper euros caused by the inflation which indiscriminate money printing brings about. To a certain extent, this is a type of slow motion default because the debts are being paid back with money that is worth less.

Once the Euro starts this process of devaluing the currency, gold will rise accordingly as the value of the Euro declines. All that is needed to launch gold on its next leg up is the realization by the public that the Euro is going to decline and the dollar is not that far behind it. The manipulation in the price of gold that we have recently witnessed is a desperate attempt by the lords of the fiat currencies to keep the public from moving into gold.

Initially people will run to the dollar as they have done recently, but when they realize that the U.S. dept has doubled in the last 4 and 1/2 years from $8 trillion to $16 trillion the wheels will come off the dollar and gold will soar.

This is not the time to be panicked out of your physical gold and your gold stocks. Now is the time to be adding to your positions, if you have the cash to do so. We will know in a couple of days if the $1,528 support level was the bottom of this correction. Today we are seeing a bounce off that level that looks like it will hold. For my money, we have witnessed the bottom in this latest correction in gold.

Yesterday, gold fell to $1,526.97 as its low and then rebounded to the high $1,540′s. $1,526.97 was gold’s lowest price since Dec. 29, 2011.

There has been no change in any of the prevailing circumstances that have been fueling the rise in the price of gold, if anything, things are getting worse for the fiat currencies and there is no shortage of hot spots that could erupt at a moments notice when you look at the actions of North Korea and Iran. Combine that with the possible reelection of President Debt and we have a situation that could deteriorate rapidly.

Unfortunately Socialism is spreading around the world and if allowed to continue, the price we will have to pay will be extremely high. The U.S. is the only economy, if unleashed, that can lead the world into recovery. It is time to reject the failed policies of socialist elites and return to the capitalistic society that has been proven to work every time it has been implemented.

Maintain your gold positions because if you do, you are going to rewarded handsomely in very short order!

Till next time, good luck and good trading!