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Excerpt Gold Drivers Report December 03, 2007
Gold: $789 - HUI: 406
This piece is a small update on 'HUI - Too Young To Die' published
on November 18, 2007
In my piece 'HUI - Too Young To Die' (November 18)
I made a case for a continued gold rally despite the bearsish sentiment
caused by the $60 plunge in gold. Gold hit its projected support at $773
briefly indeed and started rallying again towards a high of $835+. So far so
good one would say but gold started plunging again and fear was surely
kicking in after Goldman Sachs issued a report last week in which it
recommended to 'short gold' in 2008 and projected gold prices below $650 next
year. Now here we are again at 50 dma support levels
many are wondering what the nearby future will bring. Will Goldman be right
indeed or will they be proven wrong again as in December
2005.
Now let's first review the chart presented two weeks ago which
highlighted the similarities between the correction of December
2005 and the present one.
Now please take a peek again at the December
2005 peak in gold. Indeed very similar to the one we just witnessed in November 2007 right? Guess what gold prices Goldman Sachs
were predicting in December 2005 for the following
12 months?
Well, their forecast concerned gold prices by end of 2006 in the $470 - $510
range. Needless to say they were wrong and my guess is they will be wrong
this time again. It goes far beyound the scope of
this update in order to discuss Goldman’s hidden agenda for predicting
lower gold prices but the bottom line is that predicting lower gold prices is
predicting an appreciating dollar. An appreciating dollar however could be
regarded as science fiction during times of severe financial stress in the US
banking sector, current account deficits exceeding $800 billion per year,
exploding costs of the middle east war (multiple trillion) and foreign
countries looking for options to diversify out of the dollar.
Now let's calm down and zoom in to the last few months of the chart above
and see what it tells us:
This chart tells us:
- Uptrend which
started in August (A-line) is still in tact
- 50 dma is only
tested for the second time now since last bull run began.
- If current AB
Flag formation could be resolved to the upside then $900 in Q1 2008 is a
real possibility.
- Current support
at 50 dma $778, the at 38% FIB retracement level
at $773
Conclusion:
There's no reason for panic since no uptrend has been broken yet!
(see also original report HUI - Too Young To Die' of November 18, 2007)
Now where to go from here?
If you are a believer in gold's future then these are
the times to increase your gold share positions since the gold shares are
still selling at fire sale prices. In other words, downside risk is low.
Higher gold prices in the years ahead will lift the entire gold share sector
but the most exciting rewards will come from junior mining companies
making new discoveries.
Here at golddrivers.com we track promising junior companies which we believe could be huge winners before
this decade is out. If you would like to participate you could opt for a free trial
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Junior Picking Contest 2008 - Win a 10 oz gold bar!
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Picking Contest for 2008. Already more than 300 participants signed up so
far! The contest starts on January 01, 2008 and the winner will be rewarded
with a 10 oz
gold bar by the end of 2008. Readers interested can
sign up HERE
Please don't hesitate to fire your questions/remarks
to: ehommelberg@golddrivers.com
By :
Eric
Hommelberg
Editor, the Gold Discovery Letter, the Gold Drivers Report
www.golddrivers.com
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