Gold stocks have been out of favor for a long time, so long in fact, that most people are not even remotely interested in them, unless they have been carefully building positions for a very some time. Lately spot gold has started to move up as we head into the traditionally good season for gold, aka, the fall.? Friday gold closed at? $1,735.30, up $34.00 for the day. There appears to be some new interest in gold stocks at this time as some life is coming into the gold stock indexes. We are rapidly approaching the point where the gold stock indexes are getting near a major upside breakout. Oh, wouldn?t that be sweet!
A Potentially Damp Blanket
I would like to throw one slightly damp blanket on the possibility of an upside breakout in the precious metals stocks with the caveat that how wet that blanket becomes depends on exactly what ?Helicopter Ben? does at the coming FOMC meeting. It seems that Chairman Bernanke has taken a liking to hinting at further stimulus and then pulling the rug out from under the markets by denying them. This FOMC meeting may very well produce the same results and end with a statement that further stimulus is available, when needed. I am not that tuned in to ?the powers that be? to be able to accurately predict what the FOMC will do, which is one reason that I believe that the FED should be audited and then disbanded. The power over the currency should be returned to Congress, where it was supposed to be according to the Constitution. At least when those idiots screw it up, we have the ability to vote them out!
HUI MAY BE BREAKING OUT, OR NOT
The HUI ground along in a trading range for almost all of 2011 even though spot gold continued up. The HUI did move to a slightly new high in September of 2011, but then it fell sharply during the correction that started in the beginning of 2012. Starting in mid March, the HUI fell? 40% , which steered anyone that was not a gold bug to ?greener pastures?. You can tell by the green lined trading range of the correction on the chart to your left, that this was a serious correction that led to many investors ?capitulating? and abandoning their positions.?? The little bounce that appears between the green lines and the blue lines on the chart shows the false move that occurred during May and June. Even with the little pop, the summer months were marked by a bearish sentiment that was established in the decline that started in February. As is usually the case during times like this, only those in the know backed up the truck and bought. The rest of the ?sheeple? listened to the financial news and bought into the hype that the recovery was on and gold and silver were relics of the past. Who knew that the past would be over so quickly!
There is little question that the gold stocks are being manipulated to the downside, because the last thing that the government wants is for investors to realize that the house of cards that the government has built (?You didn?t build that!?) is coming apart just before the election. Everything? that is going on right now is designed to extend the reign of? ?The Community Organizer In Chief?. Unfortunately for him, the FED?s needs may change everything.
The Damp Blanket Redux!
Back to the ?damp blanket?, just for a minute. Is Ben Bernanke working for ?The Community Organizer In Chief?, or is he going to try and impress his (hopefully!) new boss? That is the question that will be answered this week. No matter which way that scenario plays out, one thing is for sure, gold stocks have never been cheaper then they have been since the decline that? ended in early June. The question now is does Chairman Ben Bernanke end the party or does he raise a toast!? Bottom line, it makes no difference because he is but a violin in the orchestra that is winding up to a major crescendo. No matter what he does, gold is going to and through $2,500 and pretty quickly!
Till next time, good luck and good trading!
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More Gold Market Analysis:
Source: http://www.buygoldco.com/gold-stocks-alive/
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