1. Gold Spot price Analysis

1.1 Gold in USD (one ounce = US$1,414.20)

• Since my latest analysis Gold managed to move up strongly and is currently above US$1,400.00 again. The correction finished as fast as it came at US$1,330.00.
• As in all previous rallies during autumn/winter the 50-dMA (US$1,355.01) proved to be strong support. As long as this moving average holds the up trend continues. Therefore the range around US$1,355.00 is now massive support.
• Technically Gold looks very good again although a sustainable move above US$1,425.00 should take some more time. The upper Bollinger Band (US$1,421.34) does currently not offer much more room to the upside. A consolidation around US$1,390.00 - US$1,425.00US$ is the most probable scenario. Prices below US$1,380.00 should not been seen anytime soon.
• The 200-dMA (US$1,232.06) is far away and will meet prices again after the big final of this up move - probably in spring 2011.
• The short & medium picture is unchanged and still very bullish. My next price target is at least the Fibonacci - Extension (261,8% of the last big correction) at around US$1,600.00. This is very possible until spring 2011.
• After a final parabolic excess up to US$ 1,600.00 or even US$2,000.00 I expect a longer period of correction and consolidation to follow in spring 2011.
• The DowJones/Gold Ratio currently is at 8,04 points and continues to move in a very tight range since months. At the moment all markets are moving up.
• Long term I expect the price of gold moving towards parity to the Dow Jones (=1:1). The next primary cyclical change is still years away. This means we are still in a long term bull market in gold (and also commodities) and in a secular bear market in stocks.

In this context you need to be aware of the huge difference between nominal and real value of an asset. In nominal terms (=USDollars) the Dow Jones Index made new all time highs 3 years ago and has recovered most of the losses since the latest crash in 2008. In real terms (which of course is gold) the Dow Jones is clearly in a bear market since 2000 and never made any new high. You can increase asset prices in nominal terms via inflating the currency e.g. quantitative easing, low interest rates etc. but you can not create real growth and value with it.

Although it may be hard to understand but we are clearly on the way to a so called "Crack Up Boom".

Definition "Crack-up boom":

The final short-lived boom that occurs in the last stages of a seemingly endless inflation. The crack-up boom results from a "flight into goods or real values" (q.v.) and marks the end of an inflation by a complete breakdown of the monetary system.

• The average cost of producing one ounce of gold is now around US$1,000.00. With an average cost increase of 15% per year Gold won´t be able to fall under US$1,000.00 anymore because supply would be immediately limited. The Gold bull market is strong and step by step we are moving closer to the final vertical phase.

1.2 Gold in EUR (one ounce = 1.054€)

• Due to the massive bailout in europe and the crisis in ireland €-Gold broke out to new highs recently.
• After a short correction including a test of 50-dMA (988€) prices moved up again strongly. €-Gold spiked above the upper Bollinger Band (1.068€) during this explosive move. Now we can find two gaps on the chart. The first one hast been closed already last friday. The second one is still open and might be closed with a short down move to 1.010€ in the day ahead.
• Looking at the weekly chart and especially the MACD Indicator (PPO) it is very obvious that €-Gold prices under 1.000€ now belong to the past and there is still a lot of upward potential for this move. I think at least 1.150€ is realistic until spring 2011. In the case that the euro crisis continues with bailouts of portugal and spain much higher prices are very likely.

1.3 Goldbugs Index USD (581.56 points)

• The gold mining index HUI had a very good recovery over the last three weeks and is now close at the all time high from 9th of november. New highs should be just a question of time.
• Only the upper Bollinger Band (576.38) could limit a massive up move The next resistance is the upper trend channel around 610 points. Besides short term consolidations the index should manage to move up to this target soon.
• At the same time the index should not fall below 530 points anymore otherwise the rally will be over. In this range the 50-dMA (530.19), the lower Bollinger Band (527.33) as well as the lower line of the trend channel should offer very solid support.
• Until now most of the gold mining shares are heavily undervalued. While Gold is above US$1,400.00 the gold mining shares do not reflect this. Therefore 2011 should be a phenomenal year for most of the gold and silver stocks.

1.4 Gold COT Situation

• Studying the recent COT Data I can only have one conclusion:

In spite of rising prices the commercials do not increase their short positions anymore. This is very positive and supports a continuation of the ongoing rally.

04/18/2009 = -153,419 (PoG Low of the day = US$885)
12/01/2009 = -308,231 (PoG Low of the day = US$1,190)
05/11/2010 = -282,644 (PoG Low of the day = US$1,201)
06/15/2010 = -278,944 (PoG Low of the day = US$1,220)
06/29/2010 = -289,956 (PoG Low of the day = US$1,231)
07/13/2010 = -248,348 (PoG Low of the day = US$1,197)
07/27/2010 = -227,555 (PoG Low of the day = US$1,156)
08/10/2010 = -230,980 (PoG Low of the day = US$1,192)
08/24/2010 = -264,300 (PoG Low of the day = US$1,210)
09/07/2010 = -287,680 (PoG Low of the day = US$1,245 / High of the day = US$1,257)
09/14/2010 = -292,939 (PoG Low of the day = US$1,249 / High of the day = US$1,274)
09/21/2010 = -292,308 (PoG Low of the day = US$1,272 / High of the day = US$1,389)
09/28/2010 = -302,740 (PoG Low of the day = US$1,284 / High of the day = US$1,310)
10/05/2010 = -299,498 (PoG Low of the day = US$1.313 / High of the day = US$1.341)
10/12/2010 = -300,022 (PoG Low of the day = US$1.340 / High of the day = US$1.353)
10/19/2010 = -293,082 (PoG Low of the day = US$1.370 / High of the day = US$1.329)
10/26/2010 = -282,435 (PoG Low of the day = US$1.329 / High of the day = US$1.342)
11/02/2010 = -276,612 (PoG Low of the day = US$1,350 / High of the day = US$1,359)
11/09/2010 = -290,953 (PoG Low of the day = US$1,425 / High of the day = US$1,385)
11/16/2010 = -264,908 (PoG Low of the day = US$1,330 / High of the day = US$1,368)
11/23/2010 = -263,893 (PoG Low of the day = US$1,356 / High of the day = US$1,380)
11/30/2010 = -270,469 (PoG Low of the day = 1.364US$ / High of the day = US$1,389 )

1.5 Gold Seasonality

• Gold continues to be in its strongest seasonal phase of the year.
• In the last 10 years every up move that started in summer lasted at least until march. The only exception was 2009. At that time however gold was heavily overbought after a US$320.00$ move (+35%) within four months without any corrections.
• During the christmas holidays precious metals often explode higher while most of the markets are closed and volume is very thin. This year we could see some big surprises in silver - of course to the upside....

1.6 Gold Sentiment

• Due to the volatile corrective moves in gold sentiment has cooled down within the last weeks.
• Noticeably many analysts thought to see a head and shoulder pattern in the gold price. Well, the truth is that Gold shake off all the weak hands once again. Therefore a large part of market participants might have missed the last move and will come in again when gold is sustainably above US$1,425.00.
• The Put/Call Ratio for gold futures is presently at 0,643 and does not signal any medium-term top. Instead there is much more room left until this indicator gives us a sell signal.

1.7 Conclusion

• Within the next couple of months Gold should be on the way to my next price target around US$1,600.00.
• Gold is in a strong parabolic spike that could lead prices higher than many people can even imagine. Until end of December we could see a move up to around US$1,500.00 - US$1,550.00. Around these levels another correction of around US$100 should be seen.
• The upward pressure for precious metals due to increased inflation expectations is very very strong at the moment. The corrections during october and november have only been short in time. Gold always found good support between US$1,315.00 and US$1,330.00.
• Looking forward to the next two weeks I suspect that Gold might be able to move up to US$1,420.00 - US$1,430.00 before a short breather back to US$1,390.00 might cool down overbought short term indicators. After this kind of short correction gold should move up strongly until christmas and end of the year.
• Should gold unexpectedly close below US$1,384.00 a double top might be in place and I would be very careful.

2.0 Recommendations

• Chinese Gold demand explodes +480% http://english.peopledaily.com.cn/90001/90778/90859/7220475.html
• Nigel Farage speaks the truth in the EU parliament http://www.youtube.com/watch?v=UcdnUE4LRMA
• Putin ditches dollar, backs Euro on trip to Germany http://www.youtube.com/watch?v=IvJEJEGzeU8&feature=player_embedded

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You can now buy my new record in iTunes Store: http://itunes.apple.com/de/album/knowthyself/id398849507