Peter Brimelow: Is gold ready for a 'rocket shot'?
Submitted by cpowell on Mon, 2008-01-28 13:21.
Section: Daily Dispatches
By Peter Brimelow
MarketWatch.com
Monday, January 28, 2008
marketwatch.com.
NEW YORK -- Gold, like every other asset market, turned in
a terrifyingly volatile performance last week.
But it managed to close up more than 3%, at a new record
high of $910.50. And the gold bugs are still confident.
The great $US 5x3 point and figure chart supplied to the
public free by Australia's gold Web site The Privateer
reversed a mid-week downturn and broke into new high ground:
the-privateer.com
On the basis of the past eight years, gold looks like going
a lot higher.
This is very much the opinion of James Turk, a veteran
gold bug, who in this weekend's issue of his Freemarket
Gold&Money Report said: "Moves into new all-time high
ground tend to be explosive, which describes gold's
current position."
Turk then repeated his comment from the previous
weekend's issue:
"In other words, anything can happen from here, including
a rocket shot to $1,000 over the next few weeks, which
I consider to be a very good probability. We already
have lift-off. Get ready for the rocket shot":
goldmoney.com
Gold shares also finished up on the week:
the Amex Gold Bugs Index (HUI) 2.3%
and the Philadelphia Gold and Silver Index (XAU) by 2.6% --
but by less than gold itself, and failing to match
the highs of the previous week.
This behavior troubles Pring.com's Martin Pring, who in
his latest weekly report expressed the view that
"any rally will be a risky proposition":
pring.com
Pring, a disciplined long-term chartist, still holds to
the view that gold shares have predictive powers over
the gold price.
Other bugs think this concept has to be questioned,
considering the action over past couple of years.
For example, Dan Norcini, whose commentaries appear on
Jim Sinclair's MineSet Web site,
jsmineset.com
Norcini focuses on the entrails of futures trading
and is much more confident:
"In times past, a $50 rout to the downside would have
seen massive fund long liquidation. ... Not this time. ...
Someone wanted gold and they wanted it badly enough to step
in front of a market that appeared to be in a free fall,
not only stemming the decline, but completely reversing it
and driving it to a record high in the process!
"This week belongs to the bulls who administered one
helluva thrashing to their enemies."
A week in which a major French bank can be endangered by
the behavior of one young trader is clearly classical
from the point of view of the new breed of gold bugs
who think the metal's trading is manipulated to hide
financial system risk.
As Freemarket Gold&Money Report's James Turk remarked:
"When people become fearful about national currency because
of inflation, bank problems, counterparty risk, etc.
(as is now the case), they increasingly turn to gold.
Their demand for national currency falls and their demand
for gold grows, causing the price of gold to rise."
Still, something new is happening in this gold bull market.
Bill Murphy's manipulation-minded Le Metropole Cafe Web site
(http://www.lemetropolecafe.com/)
has been reporting for some weeks that India, long the
biggest and most dependable buyer of gold, has finally
been out of the market.
On the other hand, the Gold Anti-Trust Action Committee,
the gold conspiracy group partly founded by Murphy,
has reportedly succeeded in placing an advertisement
in next Thursday's Wall Street Journal expounding
its thesis.
Is a sentiment watershed at hand?
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