Bullish on Gold

Source:

...I remain bullish on the gold share market to finish the 18 month correction and revert back to normality and out perform the metal prices as it moves into the big wave III of this long term bull market.

...Once again the US knocked the gold price in excess of $10 overnight several times last week. High interest rates were the supposed catalyst. But I always thought the argument was that high interest rates were a contributing factor to inflation and that gold was supposed to be a hedge against inflation. One thing I have learned from over 35 years in this market is that US traders can play the market any direction for any reason they like. There is no consistency in their logic. If it can be used to make a short term profit, then role out the reasons. The bottom line is that bullion has fallen 5% whilst the dollar has appreciated 2%. There is something funny somewhere.

The Dow collapsed 200 points on Thursday night from an overbought position. But I do not look at this as the end of the market move. Sure the market was overheated in the short term but there are no sell divergences or major danger signals on the weekly data and I continue to look for the 15 500 target to be achieved before we see any protracted corrective phase.

Oil continues to dominate the commodity charts. It has strongly out performed all the precious metals since February. But there are signs of a divergence sell signal indicating that the superior performance of the oil price is about to be changed. This does not mean a fall in oil but a lessening of the superior performance against the precious metals.

The Rand has turned weak as expected and I must look for further short term weakness in the currency. Meanwhile the shares continue to seriously under perform the gold price in both dollars and Rands. All sorts of reasons are being propounded for these actions but I remain bullish on the gold share market to finish the 18 month correction and revert back to normality and out perform the metal prices as it moves into the big wave III of this long term bull market.

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