gold.....................GOLD!!!! part two

[michael]

AGE (american gold exchange) Gold Market Update - Precious metals finding direction

 

 

In the past week the Dow Jones Industrial Average has fallen sharply and it's important to put the Dow decline into perspective. The current sharp spike below major support at 12,000 reveals tremendous weakness from a technical stand point. The DJIA chart now shows a classic right shoulder, head and left shoulder formation, which suggests further and possibly substantial losses are possible. Technically, this market now looks poised to fall further and test previous support at 10,200.

 

 

Precious metals finding direction

 

 

In our last update, we explained the transition currently underway in precious metals from a market driven by the weakening U.S. dollar to one driven by inflation. This change brings explosive upside potential, as we saw in the late 1970s, but it promises to be a bumpy one. In the past month, for example, it hasn’t been unusual to find gold up $20 on Monday, down $20 on Tuesday, up $20 on Wednesday, down $15 on Thursday and up $5 on Friday for a net weekly gain of $10—and a few new gray hairs!

 

 

What’s important to remember is that the major trend of the last five years remains firmly in place, and that trend points to a much higher gold price. In the current financial environment, gold is one of the few assets to provide insurance from the instability of rising inflation, a declining dollar, a weakening U.S. economy, and volatile stock markets. Remember, in 1980, the only financial asset to set a new record high along with skyrocketing inflation was gold.

 

 

As we go to press, precious metals markets are once again firming up, rising from recent lows and moving above their recent trading ranges. Our regular readers and customers know that late spring and summer frequently offer some of the lowest prices of the year for precious metals. Classic U.S. gold coins are particularly underpriced right now, offering what may well prove to be the best buys for quite some time. While precious metals will be subject to choppy trade and perhaps a surprise or two before summer passes, classic U.S. gold coins at today’s low prices offer greater value, stability, and profit potential as we make our way through these troubling times.

 

 

 

Gold

 

 

After surging from $650 in August 2007 to over $1,000 in mid-March 2008, its highest price ever, gold entered the typical consolidation phase that follows a major upturn. Impressively, though, it has held most of the gains achieved during this historic run, which bodes very well for its fundamental strength going forward. Trading primarily between $870 and $910 since March, with the occasional feint higher or lower, gold is around 5% cheaper than it should be at present, in our judgment.

 

 

 

If you’re a day trader who’s been lucky or skilled enough to stay on the right side of gold’s recent daily price swings, then you are a happy camper. If you’re a long-term investor you’ve probably grown a little confused by all the recent volatility. Don’t be. In our opinion, gold is simply in the normal consolidation phase that historically follows a period of big gains, and the increased volatility is a marker of the current economic tumult in all financial markets that will ultimately benefit gold.

 

 

But unlike its protracted 18-month consolidation after surpassing $730 in May 2006, the current one promises to be short-lived, more like a typical summer lull. What’s different this time? We believe the transition into an inflation-driven bull market will not only support the gold price but push it much higher by the year’s end. In 2006, gold was really an inverse dollar-play. In a full-fledge inflationary environment like the one we’re entering, the gold price will not be bound as much to movements in the U.S. dollar and can deliver truly explosive gains on its own powerful fundamentals.

 

 

Some of you undoubtedly remember gold’s progress in the 1970s when it surged from $35 to $195 an ounce (1971 to 1975), pulled back to $105 (1975 to 1977), and then rocketed to $850 (1977 to 1980). In our judgment, it’s now entering a very similar kind of bull market driven by record-high oil prices, escalating conflicts in the Middle East, and the dangerous combination of inflation and recession known as stagflation. When all is said and done, we continue to believe, the gold price will reach $1,700 or more. Remember, the 1980 high of $850 is equivalent to $2,200 in today’s dollars, so gold has plenty of room to run before setting a new record high in real terms. Within the present economic context of exploding global inflation, a continuing credit crunch, and a still-bursting housing bubble, $2,200 an ounce doesn’t seem far-fetched at all.

 

[physics-fan3.14]

While much of this article seems to be typical gold bull market hype, I do agree that if inflation does seem to kick up a bit, like it seems to be doing, then gold might rally a bit. The rest of the article, however.....

[michael]

well i agree about the market report hype from a gold and classic gold retailer

 

but

 

i think overall it is correct/true and on the money so to speak

 

but time will tell!!

[prudden]

I got this "article" in a spam e-mail today.