Gold In 2011: Short- & Long-Term Analysis


Gold and Precious Metals

UUP Dollar Chart

US Dollar Analysis:

  • The Dollar rally has continued to fail over the last couple of weeks.
  • The Fed will print until the dollar is worthless, because that is their business. My richest contacts believe the dollar is going to ZERO within 20 years.
  • The Federal Reserve, with the absence of a Gold Standard, is the worst financial system devised by mankind, or should I say, monster-kind. There has never been an audit of the monster, and there is no safety mechanism to limit how much your Fed can print.
  • Still, the weak volume on the price decline in the USD over the last few days indicates a short term move higher is likely near.
  • A stronger dollar into the first few weeks of the New Year will allow a correction in GOLD.
  • My SuperForce Analysis in the paper currencies is designed to enable you to enlarge your real asset positions.

SGOL 6 Month Price Chart

Gold Bullion Analysis:

  • Gold has appreciated very nicely over the last few days. Further strength will generate a short term profit booking signal.
  • My intermediate downside target remains 1260, followed by a blast to 1500.
  • Note the solid volume-based support on the above SGOL chart. Volume is the single most important technical indicator, and the most ignored indicator because it isn’t flashy. I would ask you to consider that profits are flashy, not squiggly lines on a chart. Get “intense” when looking at volume, if you want intense profits.
  • The Gold fundamentals couldn’t be any better. Big Government means: Big Gold. My 1260 target is a gift to you, if it happens. I see short term excessive bullishness in stocks and commodities; and the making of an improving dollar over the next month or so.
  • Longer term, the policies of the government in the US are starving the economy, failing in job creation, and feeding inflation. The “Shovel Ready” jobs are nothing more than Black Hole spending from 2008 forward.
  • Consider the inflationary Black Hole projects; spend 10,000 dollars to create 3000 dollars of economic activity. I own a manufacturing company. I don’t pay 10,000 dollars to get 3,000 dollars. I wonder how eager the US Congress would be to spend 3 dollars to get 1, if it was their personal funds that had to be spent?
  • The Federal Reserve System cannot survive without inflation. The day they stop printing as policy, the whole system collapses.

SGOL 14 Month Price Chart

  • Analysis: A long term BULLISH picture, with a short term warning.
  • Note the MACD working off the overbought condition. What has developed over the last week is very light volume and strong price performance. That’s not ideal for future higher prices. Volume is light although this is traditionally a light trading week.
  • I will continue to shave profits off as the market moves higher and will start the SuperForce power 2 re-buys on weakness, meaning I rebuy every 2% down, because 1260 is only the ultimate possible target, not a guarantee.
  • If you are an investor who is light on bullion and other real assets you likely will have an opportunity to buy this correction with confidence.

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January 1, 2011