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We currently have the world's
financial and currency markets in turmoil. The debt issues of the world, the
latest being Hungary, driving down the markets on Friday.
As we write this piece the gold
market has exploded to the upside which is not surprising to us with our view
of where we see gold in the coming months. See our forecast below.
Yesterday at lunch here in Ajijic,
Mexico I was able to overhear a conversation at the adjoining table. A group
of 8 Mexicans were speaking in English about the issues confronting the world
including the problems in Hungry, Greece and yes, the United States. True,
these were professionals and savvy individuals but I was surprised to hear
their discussions and concerns.
Their conclusion was and is the
same as ours - BUY GOLD.
We continue to believe the gold
will breakout to new highs very soon. The question is will the shares of the
juniors follow or will be they be held captive to the direction of the
financial markets which many believe are breaking down? We honestly do not
know the answer to this question but we believe our day will come when the
juniors will explode providing investors with incredible gains. We suggest
that investors be strategically positioned now for this move while also holding
some cash to buy at lower levels if the opportunity presents itself.
One chart which we have been
watching is the HUI (Gold Bugs Index) compared to the S&P 500.
Clearly the chart on a daily as
well as weekly basis reflects the HUI outperforming the S&P 500 and we
see the potential of a breakout to the upside coming soon after a long period
of consolidation. This breakout could be the catalyst for the big move we see
coming soon. These charts are presented as of 12:04 pm EST as the markets are
moving strongly to the upside.
In a previous article, Gold and
The Parabolic Peak, we laid out (with charts) an argument for gold to peak
between $2,450 to $3,500 based on previous parabolic moves in other markets.
In addition, if we apply a Fibonacci projection from the January 1980 high of
say, $820 we see 3.618 and 4.618 pointing to $2,967 to $3,787, respectively,
falling within our target prices.
When we start to see gold go
parabolic, rising day after day and everyone in the world getting excited and
joining the party, then we will know gold is in a bubble. We believe that
gold's big move up with be a moon shot. Our challenge then will be to exit
before the masses and we see the strong possibility of this event happening within
the next 18 months.
We believe investors are being
given the rare possibility of a once-in-a-lifetime-opportunity, yes, a
parabolic move in gold. The question is what will you do with it and do
you need some assistance?
Dudley Baker
PreciousMetalsWarrants
Dudley Baker is
the owner/editor of Precious Metals Warrants, a market data service which
provides you with the details on all mining & energy companies with
warrants trading on the U. S. and Canadian Exchanges.
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