Thursday, January 27, 2011


Where's Gold headed to and why?

If you make the assumption that only a correction is taking place then Gold
will go to the Fibonancci  level of .618 which will bring it to $1370. Chances are
the Gold price will retrace the entire move back to $1156 or $1180, the level
at which the recent level begun in July-2010. If the bottom price of $1156 is
taken out then the Bull Market in Gold is over. Currently the Bulls are hanging on
waiting for much higher prices like $5000. But one has to ask, is it completely
over for Gold. If we judge by the herd instinct then the answer is no but history
bears out that the herd approach is almost always wrong. All Bull Markets
consist of 5 legs, subdivided into 3 Legs Up and 2 Legs Down. If you look at the
Chart above you will see such a 5 Leg Formation. Price levels also meet all the
Fibonancci measurements for a 5 Leg formation. Another aspect is the fact Soverign
nations are in trouble on every level possible including their Domestic Banks and
for many an inability to sell Country Bonds. The United States is effectively
Bankrupt and its only time before the Bond Vigilantes catch up with America
and its going to happen much sooner than people expect. The Gold Market in size
is very very small once estimated at 50 Billion  now closer to 100Billion. When
Central  Banks are forced to sell they will crash the Price of Gold. When the issue
of Inflation is buried once and for all in favor of a Massive Deflation the Gold
Bugs will lose their Fundemental arguments not to mention a very soon upcoming
Market Crash that will put the fear of god into the most fearsome of Gold Bugs.

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