Market Wrap
Week Ending 11/14/08
Gold
Gold was up about 1% for the week closing at $743.10 (spot). The daily chart of GLD shows price breaking just above its upper downward sloping trend line. The gap up may need to be filled - sooner rather than later.
The vertical line represents significant resistance, which if broken through could lead to a good move up.
A positive MACD cross is in effect and RSI is headed up. Histograms have turned positive as well.
Longer term support is holding so far.
From July to Oct. gold was stronger than silver. From Oct. to Nov. Silver performed better than gold. Now the trend has changed again in favor of gold. Look for gold to outperform silver for several months.
Silver
Silver was down about 6% for the week. Although a positive MACD cross occurred the gaps up proved to be too weak and price retreated to fill both gaps. MACD appears to be curling over and getting ready for a negative cross.
GDX
The GDX was down a little over 5% for the week. However, as I've said many times before: the index is not important unless you trade it. In the present environment individual gold stocks are performing much better than the GDX. The HUI was down 7%, while gold was up for the week.
There are several stocks in the index that have been holding it down due to their weakness. I would rather own the strongest stocks in the GDX than the index itself. To view the stock watch list and full market wrap report click here: Honest Money Gold & Silver Report
XAU Long Term
Xau/Gld Ratio
G-20 Meeting
This weekend 20 major world powers are meeting to discuss the global financial crisis. Some refer to it as Bretton Woods II. I prefer to call it the G-20 Meeting. Many in the news media have speculated about the meeting, saying that a new world order is being planned; or a new world currency; or some type of a new financial system. A gold standard has been mentioned.
There will be no gold backed currency system coming out of this weekend's meeting, not from this group. Not much more than lip service will be offered. Longer term they would like to implement some form of the existing SDR system the IMF presently uses, or an electronic currency of some sort.
Their ultimate goal is a one world electronic currency. I have written about this in my new book: Honest Money. Those at the top of the food chain have been and will continue to hoard the world's supply of gold. He who controls the gold controls the world. The elite do not want the common man using gold. Of this you can be assured.
The U.S. is the preeminent sovereign nation in the world. One reason is that its currency is the reserve currency of the world. The size and magnitude of its economy and military power weigh heavily in the balance. Any major change in the existing monetary order would involve the removal of the U.S. from its exalted position above the rest of the world. The U.S. will not give up its top dog status unless forced to. The entire world has been fooled by the U.S. into accepting its paper fiat debt-money as payment in kind. Such habits are hard to break.
If nothing else, the meeting shows that many in the world have grown tired of playing second fiddle to the U.S. There is a group that would like to see the U.S. lose its alpha male position, but they are not part of the government per se. They are the movers and shakers lurking in the shadows behind the scenes.
The Chinese and Japanese buy over 44% of our government bonded debt and they have not been big buyers as of late. They hold too many dollars. Foreigners do not want to increase their dollar holdings. However, they have a problem: they can't just dump their huge positions and cause a run on the dollar. The dollar would collapse along with the value of the huge positions they hold. Such actions would be financial suicide. I have written about this before in China's Nuclear Threat - the U.S. Dollar.
What will come out of this weekend's meeting will be broad generalizations and promises. It is doubtful if any new policy will be put in place. The CFR's new book on Regional Monetary Integration only touched upon the subject of a one or three world currency system. It will take several years and many meetings before any concrete plans evolve. Even among the elite there are many differences. There is one group that remains in favor of national sovereignty, while another is opposed.
But there is hope. There is a way to restore order, a way lit bright by luminaries such as Congressman Ron Paul. Take the time to listen to his short discussion about the G20 meeting. Listen and learn from a humble man who knows from whence he speaks: RON PAUL ON THE BIG G20 MEETING.
Good luck. Good trading. Good health, and that's a wrap.
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