Submitted by Stewart Thomson:
From the daily bond market chart, you can see that a breakout from the bullish wedge pattern has occurred. The first target in the 145’20 area was touched yesterday. If the bond can rise above 150, I think gold will surge over $1800. Regardless, a rising bond price is good news for gold & silver investors, at this stage of the crisis.
Once cost-push inflation (inflation in goods for which there is little or no substitution available) becomes a concern for institutional money managers, gold should rally even more strongly, while the T-bond falls in price.
1. “Just Like That, Safe Havens Are Back in Favor” – CNBC news, Feb 26, 2013. The Italian election results are in, and stocks have sold off hard.
2. Please click here now. You are looking at the weekly chart for the Dow. Make sure you double-click on the image to fully expand it. Hedge fund managers seem to be engaged in a competition, to see who can talk their short-weighted book with the most gusto.
3. A decline of just a few hundred Dow points can make a leveraged hedge fund a lot of money, so I would be careful about assuming the Dow is about to crash.
4. My suggestion is to focus on the key support areas near 12,876 and 11,248. If the Dow goes down there, you could buy a little bit of stock. You could use my pyramid generator, aka the “PGEN”, to scale in your buys systematically, around each of those points.
5. Shorting the Dow is a very questionable proposition. Gamblers would likely fare much better by buying GDXJ, or individual junior gold stocks, which look set to outperform almost everything in the near-immediate timeframe.
6. Please click here now. That’s the daily GDXJ chart. Traders who bought into the $16 area (I did) could book a little profit at $18.50, $19.01, and $19.84.
7. The bulk of junior gold stock that is bought in this general price zone should be held as a long term core position, because Shinzo Abe appears to be attempting to reflate the world.
8. I think his strategy will backfire, and the Yen will collapse, but if he succeeds, his actions are very bullish for gold stocks.
9. If he fails, that’s even better news for precious metals investors, because gold could begin a near-parabolic move to the upside. I’m convinced that a collapse of the “safe haven” Yen currency would likely create severe cost-push inflation, in every major Western nation.
10. Goldman Sachs is in the news, arguing that the downside for gold is bigger than they anticipated. They are quoted by Business Insider as saying, “The gold market sell off is about to accelerate”. They mention a target of $1550.
11. Well, that’s interesting, because gold already traded in the $1556 area last week. I think their target has already been acquired, so they can cover their short positions now.
12. Maybe they already have!
13. James T. Bond completed a very successful mission yesterday. For a closer view of him in action on the price grid, please click here now.
14. That’s the daily bond market chart, and you can see that a breakout from the bullish wedge pattern has occurred. The first target in the 145’20 area was touched yesterday.
15. Note how the bond hovered just above the black downtrend line, before leaping higher. If Chairman Bernanke reaffirms his commitment to QE before congress today, the T-bond could rise to my 2nd target, in the 148’10 area.
16. If the bond can rise above 150, I think gold will surge over $1800. Regardless, a rising bond price is good news for gold & silver investors, at this stage of the crisis.
17. Once cost-push inflation (inflation in goods for which there is little or no substitution available) becomes a concern for institutional money managers, gold should rally even more strongly, while the T-bond falls in price.
18. As a best guess, the T-bond price might rise to 200 or even 300, before cost-push inflation becomes widely recognized.
19. A crash from the 250-300 level could harm bond market investors, but it would not result in materially higher interest rates, even if bond prices were cut in half.
20. The technical positioning of gold on the price charts now, hints that Chairman Bernanke’s speech to congress will be bullish for gold.
21. On that note, please click here now. You are viewing the daily gold chart. Note the action of my 14,7,7 Stochastics indicator. It can produce both “momentum” and “value” buy signals.
22. Momentum signals tend to occur with the oscillator sitting around the 40-60 level. Value signals tend to occur under the 20 level. The current signal is a “value buy”.
23. Having said that, gold has rallied almost $50, from the $1556 area lows. In the very short term, a 50% pullback is easily possible, but I think gold is either beginning a trending intermediate move higher, or is just one more “stochastics cycle” away, from doing so.
24. Silver looks very good here, too. Please click here now. I don’t use the 4,8,9 MACD, unless the 14,7,7 “stokeillator” is flashing a buy signal on the gold chart, which it is now! All lights are green for the metals, and all we need now, is for Chairman Bernanke to wave the starting flag, to begin the race higher. Let’s cheer for him to do so, today!
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