Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Little Joe who wrote (7001)	1/31/1998 10:46:00 AM
From: Sergio R. Mejia	Read Replies (1) \| Respond to of 116762

The-privateer's Gold Update: "a 50/50 proposition", "No bottom yet." A strange week. There were rumours that President Clinton was looking into resignation procedures last week before Hilary read him the riot act. Anyway, the State of the Union speech was duly delivered and while Hilary flew off to Davos (Switzerland) to discuss the future of the world, Bill went "walkabout" (that's an Aussie expression) to small-town USA to shore up his connections with the peepul. According to recent popularity polls, it's worked so far. Billy has an approval rating of nearly 70%. While all this was going on, U.S. stock markets had a wonderful time with the Dow rising by 100 points or more on two consecutive days and the S&P 500 actually managing to set a new record high close on Jan. 29 of 985.49. Long-bond yields, which were threatening the 6.00% level last week, subsided to just above the 5.80% level. And finally, the Dollar regained some lost ground against the Yen and kept on rising against the D-Mark. While all this was going on, Gold slipped back below the $US 300 level on Jan. 26, only to rise as high as $US 306 two days later. The January contract closed out, the active month became April, and spot Gold closed the week and the month on January 30 at $US 302.90. There is definitely an anticipation out there that Gold has bottomed in $US terms. For example, there has been a rush on Aussie Gold stocks over the past week. The Australian Gold stock index is up 16.1% so far this year, almost all of that rise coming in the past week. That compares with the All Ordinaries Index (the major Aussie stock index) which has risen by a mere 1.5%. On top of that, the perennial scare stories about imminent Central Bank sales have dried up, as has the coverage of "patriotic" Asians selling Gold to their governments to stave off financial armageddon. On the "negative" side, open interest on the Gold futures market has been falling ever since Gold first broke above $US 300, pointing to an increase in covering by Gold shorts without balancing long positions being taken up by either commercial or speculative buyers. The $US Gold price did poke above its 100-day moving average with the $US 306 close of Jan. 28, but this is the sixth time that has happened in the post Feb. 1996 bear market. By the end of the week, it was back below its 100-day MA on the weekly bar chart. For more on this, see our History of Gold Bottoms page. Finally, the "seasonal" factor is all wrong for Gold. As a rule, the Gold price either does nothing, or more frequently falls, between the last week of January and about the middle of March. That has been the case in the past, but there has not been an Asian crisis in the past, nor has there been a situation where two large nations (South Korea and Indonesia in this case) have declared moratoriums on the payment of principal and interest on large amounts of debt owed to foreign banks. On balance, its a 50/50 proposition. On the upside, we have the recent high of $US 306. If Gold can manage to exceed that level, and especially if it moves up beyond $US 310, a bottom signal will definitely be generated. On the downside, there is the $US 300 level, now a very important "support level". Any penetration back below $US 300 would be dangerous. Technically, a "bottom" is still not in for Gold, not in $US anyway. the-privateer.com