Week Ending 1/23/09
Gold was up $40.82 for the week, to close at $899.62 for a +4.75% gain. Perhaps more impressive than what gold did is what it didn't do.
Earlier in the week the dollar rallied, yet gold held its ground. It had every excuse to go down, but it didn't. This was good market action that foretold of the move to come.
Gold broke above overhead resistance and put in a positive MACD crossover. Histograms and RSI have turned up as well. There is a slight RSI - divergence so this needs to be watched closely.
Last week we added DGP, SLV, CEF, and SLW as discussed Thursday and Friday on the website bulletin board. The trades were filled Friday morning. Silver is looking very promising here, as is platinum.
Last week's report mentioned that there were several positive divergences on GLD's chart that might be hinting at a forthcoming move up. That move higher occurred on Friday.
Follow through confirmation is now needed. The next targets to the upside are the Oct. highs and then the July highs. Last week I wrote:
"The weekly GLD chart shows that a possible inverse head and shoulders bottom may be forming, with the right shoulder presently under construction."
If GLD continues to move up and through the 90 level on expanding volume and holds that level, turning resistance into support, this would confirm the head & shoulders formation. Upside targets of 107 are possible.
Remember: inverse head & shoulder breakouts are not valid until the neckline is broken above with significant expanding volume.
Volume is very important. False breakouts can easily occur. Watch the volume figures for clues.
GLD's point & figure chart shows a double top breakout occurring on Friday with a price projection of 107 possible (87-67=20 - 87+20=107).
Below is gold's price in U.S. dollars, followed by prices in Euros and Pounds.
These charts show a bull market in several different currencies, illustrating that gold is the one and only sound currency.
It is a good sign when gold is performing well in more than one currency. Remember, all currencies are paper fiat debt-money: they all are losing purchasing power through debasement by excess credit (money) creation.
This is the root cause of the financial crisis - the money is debt-money and you can't pay off debt with debt. Anything else is a crock.
Gold is priced in Euros above; below it is priced in British Pounds. Notice how both charts are much stronger than gold priced in U.S. dollars.
This is especially true of the bottom chart that moves from the bottom left corner to the upper right hand corner - an unquestionable bullish signature.
During the recent commodity bashing platinum got whacked pretty hard. It fell from a high of $2229 dollars, which was more than twice the then going rate for gold, to a low of $752.10.
It closed the week out at $958.00, while gold closed at $899.00. The platinum to gold ratio has come in a huge amount, suggesting that it is undervalued.
Platinum priced in Euros and Pounds looks much different than when priced in U.S. dollars.
The latest full-length version of this week's market wrap is available on the Honest Money Gold & Silver Report website. All major markets are covered with the emphasis on the precious metals.
Recently made available on the site is an audio version of the book Honest Money. Stop by and check out our stock watch list and new precious metal buys executed this week.
Good luck. Good trading. Good health, and that's a wrap.
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