Gold’s Next Move

October 26, 2009 Gold Stocks, Physical Gold, Predictions No Comments

Gold’s next move may be to test the $1,020 level before it runs to and through $1,070. The dollar’s rise today should be viewed as a short term pop up and not a change in trend. Gold is going to and through $1,070 on it’s way to $1,100 on its next run up.

This is going to be short today, because I am still enjoying the last day of my vacation. I arrived back home last night and I must admit that I would rather be looking at the water of the Sea of Cortez than looking at the latest gyrations of gold on the computer screen. Last week gold traded in a tight range between $1050 and $1060 but this week is going to be different!

Newmont Stock Cert Gold’s Next Move

Both Paper And Physical Gold Are Set To Run!

Lots of info is coming out this week which will give an indication of how the economy, unemployment, etc. is going. Judging by the rally in the dollar, some of these numbers are not going to impress. This dollar move is a preemptive strike in another attempt to pull the rug over the bad news. This will not last long, with the gold price possibly testing $1,020 before correcting back up.

Flight to the Safe Haven, Or Smoke Screen?

Right now it is all about the dollar and gold follows in lockstep in the inverse. It will be interesting to see when the gold buyers will come in and stop the dollar illusion in it’s tracks.

Is A Test Of $1,020 In The Cards?

Nothing has changed with the state of the U.S. Dollar even though in the short term it may pop up. It is important to keep this in mind as you look at the short term gyrations in both the dollar and gold. This is just another short term opportunity to pick up both physical and paper gold on the down tick.

Government Is Making Matters Worse!

A quick look at what is driving the dollar down will confirm its latest move up for what it is: Temporary. We live in an age where there are no leaders and very little vision unless you consider the Marxist Utopia as a vision. A “sentence” would be the more appropriate term for the new “progressive” Marxisim that is being foisted on the American public by President Obama and his ilk.

The political class is taking the easy path in monetizing the debt and pandering to the unemployed with handouts instead of leadership designed to put America back to work. The tough love of sacrifice is only offered to the public and never to the politicians and the bloated government bureaucracy. Leadership requires a change in mindset, or in this case a total change in the party in control of Washington. Government cannot solve the problems this country faces because government is causing them. It is time to dismantle Washington and let the American people put this country back on the right track. This country was founded on the rule of law, free markets and a stable currency.

In the last nine months have you seen this administration take any steps that would nurture these concepts? Despite the rhetoric to the contrary, the answer is a resounding NO! Now, couple this with the President’s desire to bankrupt the coal industry in this country and you will begin to see that the economy is not going to turn around quickly with these policies. It will be interesting to see how West Virginia votes in 2010!

These are but a few of the political reasons why the dollar will continue down and gold will move up, but they are not the only reasons that favor a significant rise in the price of gold.

The Easy Gold Has Already Been Dug Up!

Gold’s price is based on the simple law of supply and demand. With investor demand, jewelry demand and foreign government demand, the question becomes is there enough supply to meet the demand?

The world’s top three producers, Barrick, Anglogold Ashanti and Newmont produce between 5 and 8 million ounces of gold per year. Just to replace these reserves as they come out of the ground , you would need a minimum of one new multi-million ounce deposit coming online per year. This just is not happening at this time. Barrick and Kinross jointly own Cerro Casale which has a 23 million ounce resource, but you are looking at from 3 to 8 years to put it into production. That is IF everything goes according to plan and that is a big if.

The Political Turmoil Card Can Be Played At Any Time!

Does the Middle East ring a bell? That is just one of the political turmoil cards that can be played at anytime. Unfortunately, the deck has many cards that can throw a monkey wrench into play at anytime. Gold will move dramatically when one of those cards hits the table. This is one move I hope I never see!

Just An Observation

While spending a relaxing week at Puerto Penasco, aka Rocky Point, Mexico, I was struck by how few people were there. The weather was perfect, between 80 and 85 and no one was there. Americans are not traveling and Rocky Point is suffering because of it.

It is pretty obvious that despite what you see on the news, Americans are not working and because of that they are not spending. We need a recovery that reduces unemployment and provides jobs in the private sector and not just in the bloated government sector.

You can take it to the bank, that gold’s next move will be up as the dollar resumes its down trend.

Till next time, good luck and good trading!