Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - Part 2 - 3rd Dec 21
Stock Market Major Turning Point Taking Place - 3rd Dec 21
The Masters of the Universe and Gold - 3rd Dec 21
This simple Stock Market mindset shift could help you make millions - 3rd Dec 21
Will the Glasgow Summit (COP26) Affect Energy Prices? - 3rd Dec 21
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With Fincrew.my - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Why BITCOIN NEW ALL TIME HIGH Changes EVERYTHING! - 22nd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Why Gold Will Get Whacked Again!

Commodities / Gold & Silver May 25, 2008 - 04:23 PM GMT

By: Alex_Wallenwein

Commodities Best Financial Markets Analysis ArticleGold has recovered from its previous two “whacks” rather nicely this past week and the Friday before, but it will very likely be whacked again very soon, possibly as early as this coming Monday.

Why?

Because gold is rising while the Dow/US stocks are in ultra-dangerous territory.


That is the one thing the “powers” cannot tolerate. Confidence in the dollar is apparently no longer a necessity for those who operate our economy from behind the scenes. In fact, a falling dollar is utterly desirable for them, for reasons to be discussed below.

A primary stock market collapse, alone, is also not to high on their list of no-nos, but a collapsing stock market alongside a collapsing bond market alongside rising gold prices cannot, must not be tolerated.

If such were to come to pass, investors would have no place else to go but to foreign stocks – and to precious metals stocks.

Here is what's happening to the Dow:

After breaking its resistance line in April during what looked to many as a “powerful rally”, the Dow has betrayed the fundamental weakness of its recent, post-Bear Stearns, recovery by shying away from its 200-day moving average twice, breaking its recent uptrend, and falling below even its 60-day moving average. It is now about halfway between its resistance and its level 1 support.

This is what it looks like from closer up, time-wise:

The engineered nature of this phony uptrend was revealed by the fact that it consisted largely of huge one or two-day rises which were inevitably followed by a series of smaller drops that at first capped and frequently eventually all but negated the previous rises.

Normal, healthy uptrends just don't look that way.

I would venture a prediction that, as soon as the Dow hits or crashes through support level 1, gold will be whacked again. If not, the Dow threatens to fall through its level 2 support, which would bring it below the January 200 high of 11,750 – and that would finally reveal that every bit of the Dow's recovery since then was contrived.

The NYSE looks very similar, except that it briefly managed to break above its 200-day MA before succumbing to its fundamental weakness, and except for the fact that its support level #2, going back to January 2000, lies far below current levels, namely at 7000. Which only means that, once it breaks below support level 1, it has along, long ways to go before it finds support.

The fundamental picture supports these chart views. Inflationary expectations are high, oil prices are high and climbing with no end in sight, US economic activity is declining, and the dollar is dropping out of sight, which makes investing in US assets far less profitable for foreigners with stronger currencies.

Under these conditions, profits are hard to come by for US companies, so their stocks tend to be weak.

At the same time US bonds have passed their historic peaks and are now engaged in a secular decline. If we're lucky, that decline will show itself only gradually, but it is very possible that it will come abruptly. That means US interest rates will be rising in spite of the Fed's frantic attempts to keep them low so as to “re-ignite” the economy.

Unfortunately, the only thing the Fed will set on fire is its paper currency – and that's why ultimately, gold will not be suppressed for long. We are now approaching June. By the end of August or early September, the next leg up in gold's price will begin. That's only three months away.

Yet, for right now, gold is still vulnerable. Indians are no longer buying much and have started to sell. Jewelers are having a hard time because their gilded adornments are getting too expensive for cash-strapped customers. Investment demand is up world wide, but the word still hasn't gotten around to western mainstream investors quite yet – and that is what must be avoided at all cost, even if such avoidance amounts to nothing more than delays.

Gold has only surpassed short term trend lines 1 and 2. Number 3 is still a ways off, which means gold has not yet surpassed its most recent high. At the same time it is struggling to stay above its 50-day moving average. The more vulnerable gold is, the easier it is for the powers to effect a swift and severe downward move. In view of the current Dow-situation, their window of opportunity is very small.

Expect them to first try another artificial boost to the Dow by extensive futures buying on Monday morning. Maybe some concocted news of concocted economic data will be published. Most likely, that won't work, though.

That's why gold will be whacked, again – but so what? Investing is more fun when you can buy cheap

Got gold?

Alex Wallenwein
Editor, Publisher
The EURO VS DOLLAR MONITOR

Copyright © 2008 Alex Wallenwein - All Rights Reserved

Alex holds a B.A. degree in Economics and a juris doctorate in Law. His forte is research. In late 1996, he began to research how money is used by some to exert political and economic control over others' lives. In the process, he discovered that gold (along with silver) is the common man's antidote to this effort. In writing and publishing the Euro vs Dollar Monitor, he explains the dynamics of this process and how individuals can harness the power of gold in their efforts to regain their political and financial autonomy.

Just like driving your car, investing only makes sense if you can see where you are going. The Euro vs Dollar Monitor is the golden windshield wiper that removes the media's greasy film of financial misinformation from your investment outlook. Don't drive your investment vehicle without it!

Alex Wallenwein Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in