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GOLD
SHINES VS. ALL FIAT PAPER MONEY Gold Gold put in another good week gaining $14.60 to close the week out at $768.40 for a +1.94% gain. This was gold’s highest weekly close since 1980.
RSI has entered overbought territory, but as the chart below shows – RSI has been higher on several occasions back during the 2006 highs when the price of gold was lower than now. The CCI index is also flashing an overbought warning, as are the MACD and histograms. In strong bull markets, however, assets can stay overbought for longer and at higher levels then most would think possible; and they can correct quite suddenly and quite violently as well.
When the price of gold is rising against most major world currencies it means that gold is in a powerful bull market, as it is gaining against all currencies – not just the US dollar. As the following charts show – this is exactly what gold is doing – it is rising in price as denominated in all major world currencies. This means that gold is being sought out because it is the currency that retains purchasing power better than all other currencies – it is fulfilling its role as the sovereign of sovereigns. The next chart shows gold gaining versus the Japanese Yen.
And the next chart shows it gaining versus the euro.
Below is gold priced in the British Pound.
And lastly is gold versus the Canadian Dollar, which has been the strongest performing paper fiat currency.
GLD Up next is the weekly chart of the Gold Trust Shares (GLD), which shows a new all-time high. RSI is in the overbought zone, however, it was much higher back at the 2006 high. All the other indicators are also flashing overbought readings. Notice how strong the accumulation/distribution indicator is.
Silver Silver did not have a strong week as did gold. It closed down -0.27 cents for the week at $13.64 (-1.92%). Below is the weekly chart of the Silver Trust (SLV), which shows the price to be well off its high. It is, however, above its upper trend line and appears to be about to test its 20 ema+. RSI has flattened out just above the 50 level and seems to have run into resistance. Volume has declined during the rally, which is not the best of signs. MACD and histograms are positive.
Next up is the chart of silver versus the Japanese Yen – the weakest currency of the major nations. It shows silver has outperformed the yen, but it has had trouble making headway since its Feb. high.
Below is silver versus the euro, which it has not been able to outperform since its high in Feb. 2007 as well.
The following chart compares gold to silver. Gold has out performed silver during the last year and is approaching a new high.
Hui Index The Hui Index was down -8.52 points to close the week out at 404.82. Considering that physical gold was up for the week – this is a negative divergence by the precious metal stocks and may be a first warning. On Monday the Hui had its highest daily close ever at 418.77, and last week it hit its highest intraday high of 423.16. RSI has not yet entered overbought territory, so it has room to run higher if it wants to. All the other indicators are flashing overbought and STO is curling over.
Xau Index The Xau was down -5.14 points to close the week out at 173.90 for a loss of -2.87%. On Monday it hit an intraday high of 182.82 before backing off to close slightly up for the day. The monthly chart of the Xau shows it breaking above its horizontal resistance line going back 20 years to 1987. This shows good strength, however, what is needed now is for this resistance level recently breached to turn into support and hold on any correction to the downside.
Next up is the point & figure chart for the Xau Index. It shows a high pole warning was given on Wed. Oct 17, 2007. When the price rises above a previous high by at least 3 boxes on the chart and then reverses down by at least 50% of its earlier rise – the warning is issued. It suggests that weakness may be coming in the short term, as sellers overcame buyers to the point of causing a reversal.
Summary As has been stated hear repeatedly over the past few weeks – many markets appear to be overextended and ready to correct. This past week saw the stock market doing just that. Friday’s fall was quick and violent. The stock market is just one of many asset bubbles brought to you by the Federal Reserve and its gang of merry central bankers from around the world. United they stand – hell bent on inflating their way into history. It will be a legacy that casts a dark shadow far and wide. Bonds had a jolly good time this past week, as interest rates sank across the board. If one didn’t know better it almost seems like the Greenspan put lives on in infamy. Salomon Brothers can turn a mean trick: any time, any where, any place. The Japanese Yen had a strong move up this week – causing the stock market to run for shelter. If the yen remains strong it will put pressure on most asset classes; if it returns to its usual weakness – most asset classes will rise. This is all due to the yen carry trades that provide much of the liquidity for the party hardy financial craze. It looks like the yen may be running into significant resistance, however, which could curtail its rally for the present time. The euro appears overbought and the US dollar appears oversold. Oil and most commodities in general keep on trucking along, although they are all becoming extended and thus susceptible to a correction/consolidation. Several of the markets may soon follow the stock markets act from last week. Physical gold has been on a tear, of that there is no doubt. Silver has been tagging along for the ride. The precious metal stocks have done quite well, but appear to have stalled out last week. The reversals in the various pm indices are a bit disconcerting, and the high pole warning for the Xau is just that – a warning. Notice is hereby given. The following quote speaks to a theme that is going to becoming more and more prevalent in the months to come – increasing subprime and other related mortgages problems; a falling dollar; lack of foreign interest in buying our government debt; and the subsequent rise in interest rates such will have. It may not happen tomorrow or the next day, but it’s coming, as its shadow is on the horizon. October 17 – Bloomberg (David Yong and Wes Goodman): “Japan, China and Taiwan sold U.S. Treasuries at the fastest pace in at least five years in August as losses linked to U.S. subprime mortgages sparked a slump in the dollar. Japan cut its holdings by 4 percent to $586 billion, the most since a new benchmark for the data was created in March 2000, Treasury Department figures…showed. China’s ownership of U.S. government bonds fell by 2.2% to $400 billion, the fastest pace since April 2002. Taiwan’s slid 8.9% to $52 billion, the most since October 2000.” Lastly I want to once again mention Congressman Ron Paul who is running for the office of President of the United States. Dr. Ron Paul is a true patriot that espouses a return to the freedom and liberties mandated by the Declaration of Independence and The United States Constitution. He is the sole candidate for the monetary system mandated by the Constitution – the hard money system of silver and gold coin, and no bills of credit. He is for bringing our sons and daughters back home from harms way dictated by the present foreign policy of Imperial over-reach in its maniacal attempt to conquer the world, while wasting billions of dollars that could be better used to feed and care for our own people in need back here at home. Take the time to listen to what a good man has to say about Honest Government – it’s a story you will seldom here, as the truth is often hidden from the masses for specific reasons. On November 5, 2007 100,000 people will be donating $100 in an attempt to raise $10,000,000 for Ron Paul’s campaign. Click the following link for details: http://www.thisnovember5th.com/ Invitation Stop by our website and check out the complete market wrap, which covers most major markets, including stocks, bonds, currencies, commodities, and energy, with the emphasis on the precious metal markets, both physical and stocks. There is a lot of information on gold and silver, not only from an investment point of view, but also from its position as being the mandated monetary system of our Constitution - Silver and Gold Coins as in Honest Weights and Measures. On the main homepage are papers and articles by some of the best out there to be had. There are audio and videos on banking, the Constitution, and cutting edge news of serious interest. Many articles are archived, while others are linked. Live time quotes on gold and silver and precious metal stocks are available, including charts for most world currencies and futures. Links to the World Bank, central banks, international monetary fund, the United Nations, and much more are offered. There is also a live bulletin board where you can discuss the markets with people from around the world and many other resources too numerous to list. Drop by and check it out. Good luck. Good trading. Good health. And that's a wrap.
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INFORMATION About the author: Douglas V. Gnazzo is CEO of New England Renovation LLC, a historical restoration contractor that specializes in restoring older buildings that are vintage historic landmarks. He writes for numerous websites and his work appears both here and abroad. Just recently he was honored by being chosen as a Foundation Scholar for the Foundation for the Advancement of Monetary Education (FAME). Disclaimer: The contents of this article represent the opinions of Douglas V. Gnazzo. Nothing contained herein is intended as investment advice or recommendations for specific investment decisions, and you should not rely on it as such. Douglas V. Gnazzo is not a registered investment advisor. Information and analysis above are derived from sources and using methods believed to be reliable, but Douglas. V. Gnazzo cannot accept responsibility for any trading losses you may incur as a result of your reliance on this analysis and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions. This article may contain information that is confidential and/or protected by law. The purpose of this article is intended to be used as an educational discussion of the issues involved. Douglas V. Gnazzo is not a lawyer or a legal scholar. Information and analysis derived from the quoted sources are believed to be reliable and are offered in good faith. Only a highly trained and certified and registered legal professional should be regarded as an authority on the issues involved; and all those seeking such an authoritative opinion should do their own due diligence and seek out the advice of a legal professional. Lastly Douglas V. Gnazzo believes that The United States of America is the greatest country on Earth, but that it can yet become greater. This article is written to help facilitate that greater becoming. God Bless America. The opinions of FSU contributors do not necessarily reflect those of Financial Sense. |
