AGE Gold Commentary is our regular report analyzing trends in precious metals and rare coins. We monitor domestic and international markets and extrapolate from our 30 years in metals to place current events into a hard asset perspective. View archives.
12/9/2002: Gold Market Update - Gold at $326.00
Greetings from American Gold Exchange. Happy Holiday Season!
Greetings from American Gold Exchange.
Happy Holiday Season!
In this update: Gold remains in $317 - $325 trading range, but the bottom is rising. Gold remains in $317 - $325 trading range, but the bottom is rising.
Expert commentary from the San Francisco Gold Investment Conference.
Gold remains in $317 - $325 trading range, but the bottom is rising.
Gold remains in $317 - $325 trading range, but the bottom is rising.
Since our last update, gold has been trading steadily in the $317 to $325 range, testing upside resistance at $325. Some important market developments are now pointing strongly to gold pushing through $325 to the next resistance level at $330, perhaps within days. Once gold breaks above $330, it’s off to the races. Will this rally be the one that pushes gold into the breakout mode? Could well be.
To begin with, the gold chart below clearly shows that the bottoms have been rising steadily over the past few months as gold has traded between $302 and $325. When bottoms rise and the top stays constant, pressure builds for a new top. Earlier this year, when gold failed to advance over $325, it fell hard and fast, testing cyclical lows. In late July, for example, gold traded up to $323, but then tumbled in early August to $302. (We issued a “buy” recommendation just days before, identifying the low point in the cycle, which has proven to be the lowest point since.) Later in August, gold rallied again to $317 before softening to a bottom at $306. In September, after rallying steadily back to $322, gold fell to a new, higher bottom at $315 in mid-September. And again in November, after rallying to $324, gold fell to an even higher bottom at $317. Only once in the last five bottoms did the gold price dip below the previous bottom, in mid-October, when it approached $310.
Recent tops and bottoms:
|Jul - 22nd||$323.00|
|Aug - 2nd*||$302.25|
|Aug - 12th||$316.70|
|Aug - 22nd||$305.50|
|Sep - 9th||$322.50|
|Sep - 16th||$315.35|
|Sep - 24th||$326.30|
|Oct - 17th||$310.75|
|Nov - 13th||$324.00|
|Nov - 25th||$317.50|
|Dec - 6th||$326.25|
* On July 30th AGE issues buy alert with gold at $303.00
Four out of the past five bottoms in the gold price have been progressively higher, all while the market top has remained pegged near the $325 resistance level. Pressure has been building for months. Today gold is on the rise again, trading right at $326. With upside pressure so strong, and the downside gap narrowing, gold has nowhere to go but farther up. We expect it to confront the next key resistance level at $330 in the very near future. When gold punches above $330, it will do so with gusto and should move quickly much higher.
A declining dollar, global tension, hundreds of thousands of job layoffs, stock market uncertainty, the risk of another 9/11-type event: all of these factors have shaken the world economy to its core, and have the potential to set it back for years. Historically, there has been no better investment than gold during periods of global turmoil. If things get really bad, watch out… the gold price could easily double or triple from today’s low price. The sky is really the limit.
Comments from the San Francisco Gold Investment Conference
I’ve just returned from the annual San Francisco Gold Investment Conference, where some of the leading authorities on gold and contrarian investing in the United States presented their views of the current gold market. I have known some of these experts since the mid-1980s through my association with James U. Blanchard III. Never, ever before I have seen these gold market veterans so uniformly bullish on gold as they are today! I’d like to share some of their comments with you.
Newsletter writer James Dines: “Gold is the hitching post of the monetary universe, and gold is also the receptacle of mass fear. The next bull market in gold will be driven primarily by mass fear, most likely triggered by either a currency crisis (think Latin America where major problems already exist) or by terrorism. Gold already has a beautiful base formation and a major upside breakout is coming that will send gold flying, most likely due to fear. Silver too! Stocks, on the other hand, are now in a bear market rally that already looks like it is faltering to us. We gave a sell signal on stocks last week.”
Bob Bishop, the gold stock analyst I trust the most: “The U.S. stock markets are in a bear market rally. We are now two years into rising gold stocks and 18 months into a rising gold market. My advice is to buy physical gold. We currently have gold price resistance at $325 and $330. Once gold goes over $330, it will go much higher. Gold is now winning! Gold is a political metal and it is now winning! Not much else is. We’re still very early in the new bull market; gold really gets on the radar screen for most people at $350 to $400. Too many investors are still preoccupied with getting money back from the stock markets, money that they’ve already lost, rather than moving forward into the next profit opportunity.”
Ian McAvity, my favorite market analyst: “The current U.S.stock market rally is a bear market rally. A weaker dollar has been driving gold higher. A firm break in the dollar and the loss of confidence in the dollar will be signaled when gold breaks over $340. When the dollar cracks, gold will be strong!”
And even the conservative Adrian Day said, “In Baltimore, where I live, last week at the mall, a microcosm of the U.S., people were only buying sharply discounted items. Cracks are already appearing. People are not buying big ticket items. Job losses will probably trigger the end of the current consumer spending spree.”
The U.S. economy is extremely fragile, being kept barely alive by tentative consumer spending and little else. It wouldn’t take much to cause consumers to close their pocket books, knocking the economy even further into a hole. As goes the economy, so go the U.S. dollar and stock markets. If they falter, gold will rise substantially.
We remain convinced that in the long term, gold has tremendous upside potential with little downside risk. In the short run, we might see another buying opportunity or two before gold breaks out over $330 with force. Nonetheless, we urge you to act now. It’s better to be a month early than a day late in today’s gold market, because as Bob Bishop said, when this market breaks over $330, it will go substantially higher very quickly!
American Gold Exchange
AGE Gold Commentary
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