Nucor Corp. (NUE) had a bullish double top breakout on March 23 when the stock traded up to 65. It closed yesterday at 66.11. If it trades at 67 it will mark a new high, another bullish signal. The uptrend line is coming in at 57 right now. As long as it can stay above that uptrend line, the trend is pointing to higher prices.
Bob Kirtley attempts to estimate how high gold will go and how long it will take. He says that if it lasts as long as the bull market of the 1970’s it will last until 2009 and will peak at around $2,000 an ounce (the 1980 peak adjusted for inflation).
However, Kirtley thinks that because of the wide availability of trading platforms that were not available to people during the previous bull market it will not take nearly as long as it did before. And if it makes a similar percentage rise as it did before, the price projects to $5,820 an ounce. Also, he thinks that the conditions that will drive the price higher are much worse than they were in the 70’s.
I have no idea how high gold might go. I just think it will go a lot higher and, I agree, it could happen fast. That’s why you don’t want to be caught not owning gold.
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Ted Butler makes three important points:
1. “The remaining silver inventory is almost entirely privately owned. This means that silver will only come to the market when economically enticed. In other words, at much higher prices, not dumped uneconomically by bureaucrats.”
2. …”when silver consumption exceeds silver current production, there will be no big release of government owned silver at uneconomic prices. The only silver inventory available will be silver that is economically sensitive, that is, silver available at only sharply higher prices.”
3. “Thus, my conclusion is that the end of the silver structural deficit marks the end of one phase and the beginning of another, potentially much more bullish phase. Just how bullish this new phase in silver will be is hard for me to describe without going over the top. It marks a phase none of us has ever experienced. It marks the beginning of a true free market in silver. Sure, phases that span many decades don’t end abruptly on a specific day, they evolve. Sure, we still must contend with the naked short selling manipulation on the COMEX, but just like the structural deficit, its days are also numbered. For the long term silver investor, the magical phase, the age of real prosperity, is about to begin. Sell-offs should be welcomed for the opportunities they present.”
Richard Russell says that if you’ve been worried about gold, relax. Gold is in good shape and in the early part of the second stage of a primary bull market. I haven’t been able figure out why anyone was worried about gold in the first place. But I do know that there have been a lot of gold investors wringing their hands. After all, a bull market climbs a wall of worry.
Also, conventional wisdom says that the worst of the housing debacle is over. Russell quotes a Barron’s article that refutes that. There are a lot more Adjustable Rate Mortgages that are going to be reset at higher rates. The Fed has a real problem. It can ease rates and try to bail out irresponsible borrowers and lenders or risk something worse than the Nasdaq collapse.
Under the circumstances, I don’t see how the Fed has any choice but to ease. If so, it’s inflationary and good for gold.
The Aden Sisters remind us to focus on the big picture. Spending and money, inflation, a weak U.S. dollar, China’s growth, and geopolitical tensions will keep the bull market in gold and silver going for years to come.
Here is why gold and silver will keep going up during a recession.
Gold timers are already throwing in the towel, which is bullish. It’s amazing what a little 6% decline will do.
Paraphrasing Minyanville:
1. The yen carry trade had nothing to do with the sell off in gold.
2. The gold sell off may very well have been a pump fake. If so, get ready for a powerful rebound.
3. There was a huge number of GDX puts bought in relation to the calls on Friday. that’s bullish
4. Gold shares are really cheap compared to the metal.
5. Get ready for the Fed to cut interest rates.
I agree with the central premise of this article. Today, the Gold ETF (GLD) and the silver ETF (SLV) are more convenient and cheaper than buying the actual metal, no matter what a lot of gold bugs say. If you’re worrying about the safety of the ETF’s consider this:
State Street chief executive Ron Logue has found the Midas touch since he launched the streetTRACKS Gold fund (GLD) two years ago. In fact, I called him “Goldfinger” a couple of years ago when I figured out that he — or rather, the fund — controlled the largest single deposit of gold in private hands in the world.
At the time, the fund held about $3 billion worth of gold; last month, the figure topped $10 billion. State Street is the blue-chip Boston investment company behind the ETF that tracks the S&P 500. When people invest in the gold fund, State Street buys gold on their behalf in the London market. The metal is held in secure vaults managed by HSBC.
That bank, incidentally, is so old it used to be part of the financial arm of the British empire. HSBC stands for The Hong Kong and Shanghai Bank, and is still known among old hands in London as “Honkers and Shankers.”
I don’t know how you get much more safe that that.
