Gold is due for a mild pullback into
mid-November, perhaps, to re-test the break of 1K. I am not
counting on it though. The chart is pretty bullish, long term
target for gold is 1300, based on a break of neckline (1K) of
inverted H&S pattern. Gold COT looks quite overextended,
but it is unclear to me how much of that, if any, is due
to GLD. Gold did break 2008 high, while the dollar did not
break 2008 low, which indicates it is stronger than just
the fall of the currency.
Gold leads the currency market, so the fact that it hit
new highs indicates the dollar will likely hit a new all
time low by January 2010. I would be careful predicting
gold dump - the fundamentals are extreme. Gold belongs at 3K,
given what the Fed is doing and has done already. How much
they printed.
The point on gold stocks lagging is well taken. However,
gold stocks are risky, these are companies, affected, like
every other company, by debt, the credit crisis,
derivatives, management, currency and other issues.
It's a difficult business.
Gold investors mostly buy it for safety reasons, so they may
shun stocks or consider them speculation. I certainly do.
Gold doubled between 2005 and 2008, while gold stocks lagged.
This was, perhaps, because mining companies' profits were
negatively affected by oil, which soared a lot more than gold. |
