Okay, everyone, we can panic and dump all our Gold stocks and run for the hills, or take a deep breath and calmly examine John’s latest Gold chart…
Gold took another hit today, falling as low as $1,621 an ounce, but John’s 2.5-year weekly chart makes it quite clear that now is probably the time to be a buyer of Gold, not a fear-stricken seller. Is there a risk of more downside action, triggered be liquidity problems in Europe? Yes, there is, but what the Gold chart is showing us at the moment is a familiar pattern which means plenty of technical support in the $1,600 to $1,625 range. We anticipate a rebound in Gold by the end of the week on bargain hunting, either through technical buying or physical buying. If not, then there could be a short-term problem.
What worries me is the fact that every day we have a risk off sale, gold drops in concert with the stock indexes. Merkel and the Fed killed any rumours of further QE and down goes stocks and commodities and gold. Oil was only held up by tensions in the M.E. So what I am saying is that for now gold is not actually behaving like a hedge. Hopefully one day that will change but for now when the markets slide – down goes gold too. So when will gold be viewed as a hedge for chaos because thats what we have right now? Your guess is a good as mine!
I think if anything it strenthens the thesis that in the event of further QE either out of Europe or the Fed that quality equities will rise also. I therefore think that those looking to diversify from gold would be well placed owning equities in high yielding defensive equities like utilities as people look to get out of depreciating paper money, a gold sceptial public will seek safety here. Anyone who thinks that more QE is not coming then they should ask themselves how else are the deficits going to get financed? Austerity won’t cut it and the alternative is a deflationary death spiral and collpase of the shadow banking system. My verdict is expect bazookas but for now it looks we aint getting ’em from Santa!
Comment by Hugh — December 14, 2011 @ 3:06 am
From Dan Norcini’s blog
quoting Jim Rickards in Twitter:
“Remember this: As EUR/USD gets closer to 1.29, FED gets closer to QE3 or NGDP targeting. Fed needs weak dollar. Welcome to Currency Wars
Comment by Hugh — December 14, 2011 @ 3:37 am
I don’t envy BMR as they try to predict the direction of gold,
stocks, etc. in particular penny stocks. I have somewhat mastered
the art of reading charts, but because they are lazy, oops! lagging
indicators & can’t predict what’s going to happen tomorrow with
certainty, they have left me with my tail between my legs many times..
I would have been better off if i stated on any given day that, if
the indexes don’t remain flat today, they will go down, that is, if
they don’t go up. Unless things change, watch for another money losing
day. Santa Claus please help us. R !
Comment by Bert — December 14, 2011 @ 4:19 am