- The gold consolidation may
already be over. Please click
here now. On this one month chart, you can see that since QE3 was
announced on September 13, gold has essentially moved sideways. That
"trading box" is likely a consolidation pattern.
- Please click
here now. You are looking at a two day chart for gold. A small but
significant head & shoulders pattern has formed, implying that the
gold price will rise above $1800, before a correction occurs.
- Many technical indicators and
oscillators are overbought on the daily chart, but they can stay that
way, while gold marches higher.
- Investors who hold solid core
positions in gold, silver, and gold stocks should stand their ground.
Traders could lighten up a bit, in the $1775-$1825 price area.
- Please click
here now. A beautiful channel has formed on the GDX daily chart. A
"non-confirmation" is highly likely now; GDX could move
higher, while the technical indicators move lower.
- I would suggest that traders
focus their attention on the green HSR (horizontal support &
resistance) lines that I've highlighted on the chart. The indicators and
the trend channel are exciting to watch, but they don't offer the same
precise entry points that HSR does.
- Longer term investors should
probably focus their buying around the important HSR at $48.72. That
point is also the "neckline" of a double bottom formation.
- Please click
here now. The technical target of the double bottom is the $56-$58
price zone. A rally towards that area would provide a great profit
- Gold has climbed about $270 from
the lows, so keep in mind that any further strength is only going to
make gold much more technically overbought than it is now, in the short
- The $1775-$1825 area should be
viewed as the "wild card zone", because anything is
possible. Gold could shoot quite a bit higher, or careen lower.
- Intestinal fortitude is going to
be more important than charts or economic reports, during this stage of
the gold bull market.
- Sell-offs are
likely to get much more frightening, and price spikes could become enormous.
Unless the gold price arrives at one of your pre-set buy or sell points,
try to ignore all the intra-day "stage drama". The
drama is nothing more than static noise interfering with your golden
- Please click
here now. You are looking at the daily chart for oil. Lower oil
prices and higher gold prices tend to make institutional money managers
very excited about gold stocks.
- The cost of operating a mining
company drops when fuel prices drop. Oil is also wealth itself, so I've
drawn in some buy zones on the chart, highlighted with green lines.
- Aggressive traders can buy oil
in the $90-$95 area, while passive investors could focus on $75-$80.
- I've highlighted 3 areas to book
some profit, with black lines. The $97 target has already been hit.
- QE3 has only barely started.
Some analysts have noted that defensive healthcare stocks are performing
well, and they worry that this means another recession is coming.
- I think it's far too early to
call for a new leg down, especially when QE3 is only 2 weeks old.
- I've suggested that the current
$40 billion a month cap on QE3 mortgage security purchases could grow
substantially, and already Morgan Stanley's chief American equity
strategist is predicting QE4!
- "QE3 will likely be
insufficient to significantly boost equity markets and we wouldn't be at
all surprised to see the Fed dramatically augment this program (i.e.,
QE4) before year-end, particularly if economic and corporate news
continue to deteriorate as they have over the past few weeks." - Adam Parker, chief U.S.
equity strategist for Morgan Stanley, Sep. 24, 2012.
- It's hard to see any fund or
retail investor who is short gold, or out of gold, being very
comfortable reading Adam Parker's statement. Major banks around the
world are calling for much higher gold prices before year-end, and I
believe the reason is because they anticipate QE3 being replaced with
- The key Employment Situation
Report will be released by the U.S. Department Of
Labor on October 5, and you can be reasonably sure that Ben Bernanke
will have his eyes glued to it.
- The weekly jobless claims
reports are not showing a noticeable drop in unemployment. This means
the Fed is more likely to accelerate their QE program.
- It's possible that Dr. Bernanke
holds the view that if the employment situation improves, it is because
of his QE actions. He could then press even harder on the
money-printing accelerator pedal. I expect QE3 to morph into QE4
very quickly, creating a surge in the gold price to record highs. The
gold correction is interesting, but new highs is
where your real excitement lies!
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