Gold is Holding $900!

January 30, 2009 Market Updates, Physical Gold, Physical Silver No Comments

Bad news on the economy reigns as gold is holding $900. Jobless numbers may bring new wave of fore closers, so hold on to your hats, this recession is just getting going. The battle for the $900 level continues and gold is holding $900!

Gold recaptured the critical $900 level yesterday and is securing it today. At the time of this writing, the DOW is down 27 at 8,121, the NAS is down 11 at 1,497 and gold is up $6.30 at $914.60. A solid close, in this range, to end the week would be very helpful for gold moving forward.

Bad news abounds to the point where avoiding the news completely may be the only way to gain some respite from the “sky is falling” mentality that pervades the world today. Maybe it is time to take a deep breath, relax and watch the Steelers and the Cardinals in the Super Bowl this Sunday. More bad news and new records will be available on Monday Morning.

As for today, the world’s largest economy (the US, for those not paying attention) fell 5.5%, the most since 1982, while Japan’s factory output fell 9.6%, the largest fall ever in their history. The Nikkei shed 250 points and Honda’s profits fell by 90%, to mention just some of the numbers coming in.

Back in the US, jobless claims rose by 159,000 in the week ended Jan. 17 to a seasonally adjusted 4.78 million. Once again, a new record. Not to be out done, the Commerce Department estimated yesterday, that sales of new homes fell to, you guessed it, a new record low. Sales were down 14.7% in December to a seasonally adjusted annual rate of 331,000.

Lender Foreclosure Gold is Holding $900!

This leads me to think that we must look at the fore closer rates in a new light. Most analysts expect a new wave of fore closers as mortgage rates reset. I would posit that a third wave of fore closers will be generated by the ever increasing loss of jobs in the US. People without jobs get foreclosed on and they certainly don’t go out and buy new homes. The need for a real jobs bill becomes more important than ever at this time. Unfortunately the current “stimulus” bill that is before the Senate does not “stimulate ” the economy, nor does it create enough new jobs in a timely manner.

I don’t think that this can be stressed enough! Get government out of the way of the private sector! Tax cuts allow small businesses to expand, while they allow taxpayers more expendable income that they can use to support those businesses. It’s not that difficult to understand, because it has worked every time it has been tried. Government stimulus plans shunt money into special interests pockets and do not stimulate the economy. If anything they stimulate and grow the government which chokes off the private sector.

Is Gold Nearing A Turning Point?

Gold, Winning The Battle For 900?

Yesterday’s action in the price of gold was most encouraging. Gold retreated at $920 and found buying support at the topside of the down sloping trend line that it broke above last week. From a technical perspective, when in a triangular consolidation formation, in which the market gets tighter and tighter and then breaks out, it will normally retest the breakout point and then move in the direction of the initial breakout. In this case that breakout direction is up!

We need a strong close in gold today because it is the end of the week and the end of the month. A close above $900 will be significant from a long term chart perspective. If we get a strong close in gold today, it will show that gold will have gained the upper hand in the battle for $900. This is fun stuff to watch as it unfolds, but I am always prepared to be smacked down just when I am at my most optimistic point. The gold market is very small in comparison to other markets and when funds or central banks decide to move the market, they are more than capable of doing it. For the time being we can only watch and wait to see where gold starts the month in February.

Till next time, enjoy the Super Bowl, good luck and good trading!