Follow The Bottom Violation
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Feb
15
Gold Heads Higher as Economy Weakens and Dollar Continues to Fail: Video Technical Analysis
What is the best harbinger of inflation and the increase in prices that follows (click chart for video)? You guessed it: gold. Markets are smart, and like it or not, gold has a much longer history than the U.S. dollar. When gold is moving higher, it should be like flashing red lights cutting through the black of night: something is amiss in the world of economics and finance.
Yes, I know — cranking jaws like George Soros are simply thrilled to scream the phrase gold bubble at any microphone within ten feet. Hey George, I know you broke the pound sterling and all that, but you’re old and senile. Further, Karl Popper would be appalled by how you’ve misrepresented his philosophy and scotch-taped yourself to his coattails. But all that aside, please consider the following:
Fact: in real terms, gold’s previous high was over $2200 an ounce. With that thought in mind, current levels don’t sound too bubble-icious to me at all.
Fact: when the Dow Jones Industrial average crossed 10,000 for the first time in the late 1990s, gold was less than $300 an ounce.
Fact: the Dow now hovers around 10,000, and gold is around $1100 an ounce. Anyone notice those flashing red lights?
Fact: the U.S. government consistently upgrades its estimate of “quantitative easing” costs. The current figure? Almost $24 trillion. Yes, you read that correctly. $24,000,000,000,000.00. (I love adding the point-zero-zero. It’s positively comical.)
Fact: the U.S. government has printed more money than ever in history over the last 24 months.
Fact: the U.S. has driven credit rates lower than ever in history.
As if these tidbits of information weren’t convincing enough on their own, have a gander at the enclosed technical analysis of gold (click chart). It should give you something to think about.
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Disclosures: Paco is long TBT, UCO, and gold. He also holds U.S. dollars by necessity, pending the advent of private gold-backed currencies.
You can buy his novel Discipline wherever books are sold.
7 Comments so far
Partners
Seems to me the Chinese economic expansion is sponging up a lot of dollars to buy assets, this is a huge economy, so maybe the inflation fears are not justified?
Seems to me the Chinese economic expansion is sponging up a lot of dollars to buy assetsI have listened to George Soros speaking recently, I thought he looks remarkably un-senile.
In my opinion anyone who calls an old man who is very generous with his ideas (whether you agree with him or not) and his money (whether you agree with where he gives it away or not), senile, is simply a self important bad mannered jerk.
With regard to your predictions on gold, well come on now superman, if you are so smart, why don't you give a NUMBER and a DATE.
It doesn't take a superman, a number and a date to know that gold will rise in the future. How can it not? This country and its entire economy is screwed.
Are you defending George Soros, a billionaire that really doesn't care about you? In October he warns "the world's current "currency arrangements" are fraught with danger, and that the world needs global regulation." At the same time, he was betting on a falling dollar.
He's a walking contradiction and he says things to benefit himself.
I think this is do-or-die time for gold.
To me, it's clear that gold is in a bubble, but it's been going on for so long I'm just wondering when the anti-bubble hits. If the leg down has started – and it may have – well, that's that. It's not going to be a very exciting anti-bubble.
If the leg down has yet to start, then the uptrend will be truly awesome before the pop.
The only thing I can imagine that would change the bubble game would be some sort of major program using a gold-based financial standard of some kind to bring transparency and honesty to the PRIVATE debt market. I'm not talking about an old-fashioned gold standard. For today's financial players, an old-fashioned gold standard would be laughably easy to use for their own devises.
Thank you for all the great posts from last year! I look forward to reading your blog, because they are always full of information that I can put to use. Thank you again, and God bless you in 2010.
[...] you wonder why I criticize George Soros for proclaiming the price of gold to be a bubble? He’s a senile old manipulator with an agenda. Nothing he’s said in at least 20 years [...]
Well, they call the Chinese economy the "sleeping dragon of asia'. So be wary when the dragon awakes!