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October 2, 2009 - There is a tug-of-war going on. On one side are those who want to buy physical gold under $1000 per ounce because they recognize both gold’s usefulness and the fact that it is undervalued. On the other side is the gold cartel, which though weakened over the years still remains a force to be reckoned with. The persistent selling in the $1010-$1012 area is clear evidence of their presence.
Who will win this tug-of-war? The market or the gold cartel? The following chart provides some important clues.
Gold remains in an uptrend; that is the salient fact. Given this clear trend, traders need only assume that gold will win this tug-of-war, just as it has numerous times over the past decade. The only question that remains for traders therefore is, when to buy?
This question is of course irrelevant to everyone accumulating gold to build their savings of sound money. Savings are always a good thing, particularly when you protect your purchasing power and avoid counterparty risk. Gold accomplishes both of those objectives, while the dollar accomplishes neither one. Savers should continue to accumulate gold, month-in and month-out in order to build their savings nest-egg. Traders don’t have it so easy because timing is always problematical, but the battle lines are drawn.
Resistance is at $1010-$1012. Support is $990-$992. Traders - For my specific recommendations, see Trading.
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