Pages

Friday, October 2, 2009

COULD GOLD SUFFER A BIG CORRECTION? SURE.

The latest on the battle for $1,000 gold: The sellers are in charge... and they could easily get "more in charge."

We don't need to overthink gold's uptrend. Gold is rising due to its centuries-old appeal as a store of wealth. With governments around the world engaged in crazed "tax and spend" policies, it's only rational to expect their Monopoly money currencies to decline in value. And for you trend followers, gold's long-term chart is a picture of the strongest uptrend in the world.

But here's a short-term consideration: As you know, we're expecting a strong rally in the dollar soon. Gold typically trades in a mirror image of the dollar. When the dollar is weak, gold rises. When the dollar is strong, gold falls.

Let's all keep this in mind: The dollar has enjoyed two solid rallies in the past six months. Both helped send gold down more than $60 per ounce. Both presented great gold buying opportunities. The third dollar rally will be no different.

No comments:

THE MONEY MARKET

FRIENDS