Gold

Long view of gold looks to have reached a support trendline with major pivot points in 2005, 2008 & now. From the chart its clear when the QE induced gold bubble started & popped.Image

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Charts Remix

Gold: looks short term oversold & getting ready for a bounce. Its weekly RSI hasn’t been this low since Oct 2008. Today’s FOMC minutes may mention the POMO outlook, which can provide the catalyst.

This link shows the S&P500 vs $GLD & worth noticing is big divergence between them. Traders are saying economic recovery is here so we dump gold, but stock market is short term overbought so any big stock correction should send investors fleeing the opposite back to gold, especially since Fed POMOs remain.

Gold200213

S&P500: Target is about 1550, then a general pullback to its 50DMA & rising RSI & chart support trendline. I don’t think its possible to reach 1700 without a short term pullback of about 7%.

SPX 200213

CAC40: Looks just like the Italian MIB. Falling trendline intact.

CAC200213

Gold update

Goldman Sach’s new targets for gold are 2013: 1800/oz & 2014: 1750/oz, citing growing risks. I wrote the following in my previous post:

“…gold…being driven by the fear of a big future plunge in fiat currency values & declining cash purchasing power.”

“There’s a fair chance that this fear could be overdone…”

“Im a gradual buyer at 1550..”

I’m therefore sticking to my buying target of about 1550/oz & am glad that a big investment bank generally agrees with my view.

 

Gold

Gold has had an extraordinary 400% run since bottoming around year 2000, when the then Fed Chairman Alan Greenspan embarked on the cheap debt expansion policy. It hit a speed bump in 2008 but has risen dramatically since then. Some may argue from a technical view that its chart since early 1990s looks like the left side of an Eiffel Tower structure & the right side may play out, but fundamentally its being driven by the fear of a big future plunge in fiat currency values & declining cash purchasing power.

There’s a fair chance that this fear could be overdone as it will take years if not decades for another asset to replace the US dollar & its Treasuries as a safe haven simply because there isn’t enough gold circulating globally unlike US dollars.

Its chart has been creating a rising trend, with a monthly support seen at 1550 & resistance of 1900. Short term support is about 1700 & resistance is 1790. Intermediate term, a bullish pennant continuation maybe forming.

Im a gradual buyer at 1550, with a view that if next year is bearish as per the SNP500 triple top playing out, it could fall back to about 1280-1330 at its 38.2% fib retracement. Upside target is 2000 for now.