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November 16, 2009

Gold at New Highs, Dollar Continues Slump
by Mike Paulenoff

More of the same... spot gold prices continue to climb to new all-time highs, while the dollar index continues to slump just below 75.00 (which my work argues is part of a developing intermediate term bottoming pattern that will be completed during the remainder of 2009, ahead of a powerful recovery rally period).

Meanwhile, my next optimal target zone for spot gold is $1140-$1150. Do you think that the subject of the falling dollar (the peg for the Chinese currency, as well as most of the other Asian tigers, etc) came up in conversation on this trip? My sense is that Obama needs and asked for a bit more patience from his Asian counterparts, for the U.S. economy to show more substantial growth, after which he likely made a commitment to focus on policies that will stabilize and then strengthen the dollar- and dollar-denominated investments from our "creditors."

If I am correct, and hints of such are revealed to the markets in the upcoming days/weeks, then any surprises will be dollar-positive, and potentially very painful for the entrenched dollar bears.

Mike Paulenoff
www.mptrader.com

Mike Paulenoff is author of the MPTrader.com (www.mptrader.com), a real-time diary of his technical analysis and trading alerts on ETFs covering metals, energy, equity indices, currencies, Treasuries, and specific industries and international regions.

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