Ira Epstein's Weekly Gold Report


". . .at this time I remain both short term and longer term bullish."

As I write this report, gold is trading about $5 higher than it was a week ago. The Slow Stochastic Chart Study remains embedded and GM has just reached a deal with its bondholders.

The most important news for the week, as far as gold is concerned is not North Korea performing missile and nuclear bomb tests. It is not Iran's President's offer to debate President Obama. It is not improved existing home sales. It is not the rise in interest rates this week. It is that U.S. consumers feel more confident than they have in over six months. This is shown by the overwhelming number of economists who predicted this week an end to this recession no later than the end of this year or the end of the first quarter 2010.

So, its market psychology that has taken center stage. It doesn't matter that the fundamentals of the market place are not improving. What's important is that these fundamentals are no longer getting worse at the same pace they were just a few months ago.

Part of the reason behind the current gold rally has to do with the falling dollar. Investors are questioning the U.S.'s ability to pay back all that we are borrowing. Interest rate futures have and are breaking down sharply as investors demand more return for the risk they are being asked to take on. This is a 180 turn from just six months ago when investors were paying the government to hold their dollars.

Right now the chart remains bullish with prices again challenging the Bollinger Band Top.

Study what occurs when Bollinger Band Tops are challenged. The challenges often result in market corrections, which offer a buying opportunity until and unless the Stochastic Study breaks down, at which point a break down to the 18-Day Moving Average of Closes often takes place.

My bias remains bullish. In fact the longer-term weekly chart is even more bullish than the Daily Chart. The weekly chart requires a move under $865 to turn the longer-term trend down. I don't see that easily happening, so at this time I remain both short term and longer term bullish.

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