The Great Gold & Silver Summer Is Technically Here!


US Dollar Chart

Dollar Commentary

  • I warned you about getting obsessed with a US dollar rally. When a market should go up and it can’t, it spells problems in the very near future.
  • The Greece mess has probably been postponed for another day. The entire western world is using the same financial playbook, which is to pretend that somehow the ballooning debts can be paid, when in reality they never will be, at least not with honest currency.
  • Gold is called honest currency because a gold currency debtor must repay the gold currency creditor exactly what he is owed. With an electronic printing press, a dollar debtor can cheat the creditor, and that is what is going on now with the world’s reserve currency, on an unprecedented scale.
  • My technical work projects new lows for the dollar are coming, and I expect the next leg of the decline to begin in the fall of 2011, with a price target of 65 on the $USD index chart. The key level to watch is $72.50.

UUP Chart (US Dollar Proxy)

  • This chart demonstrates the major risk the dollar has of violating volume-based support. This action is technically unhealthy, and warns of a serious selloff down the road. This key area was nearly violated soon after my fuel cell buy signal occurred. Now failure of that price looks likely again.
  • The more that an area of support is tested, the more likely it will be to fail. The bigger the volume in that area, the bigger the decline that could follow failure of that support. I don’t think that most investors realized how perilous the position of the dollar is right now, technically, and what that means on the upside for your gold investments!

SGOL (Gold Proxy) Chart

  • Two weeks ago I said, "I continue to call for a breakout in precious metals in the late June to early July timeframe, with new highs projected at around $1650 for gold bullion. My internal indicators are pointing to new highs in the August timeframe for gold."
  • The powerful upside action in the gold market over the past week is just a small (but juicy) taste of what likely lies ahead for your gold stocks. Volatility will increase and devour most trading systems that wait for some kind of breakout, and then try to climb aboard and ride to higher prices. That may have worked in the past, but it is not likely to work in this stage of the gold bull market.
  • Gold bulls should beware of thinking you can outsmart the bull market itself. The vast majority of traders cannot succeed and the history books are filled with examples of those who tried and failed. After many months of consolidation and correction, the gold sector is preparing for takeoff!
  • I think your game plan should be to trade up to 35% of your gold assets, and use some of the profits to add to your core position. My recommendation is to hold a 65% core position in gold. That is put in the vault for years, and sold only when prices are multiple times higher than they are now. Do not be in a hurry to "need" higher gold prices. Instead, be in a hurry to vault your core positions.
  • Very little chart damage has been done to gold, yet sentiment is terrible, with "2008 again" calls everywhere. I’m expecting my forward targets to be achieved relatively soon, because of the level of this negativity. This is not a normal bull market. Normal money flows into a bull market are normally based on greed. I expect gold to accelerate on the upside when the public panics as they finally understand the magnitude of the debt problem.

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