As you can see from the above chart, gold's 200 day moving average (dma) and long-term trendline have been acting as good long-term support since the infamous Lehman Brothers instigated crash in the fall of 2008, which also marked the bottom of the decline in gold.
After the crash in November 2008, gold was the first asset class to quickly recover and has been galloping full steam ahead in the years since. Since the beginning of its bull market, gold has been delivering annualized gains at a rate of 17.4%, making gold one of the premier investments of the last decade. (Gold has outperformed almost every investment in the world except for silver.)
As long as gold can continue to stay above its 200 dma at $1596 and its long-term trendline at about $1605, then we should consider gold to still be in full on bull mode. A violation of this trendline could spell a potentially severe correction and a lengthy period of consolidation. although this scenario looks to be unlikely. Seasonally, gold is ready to move higher into the first quarter of 2012 and with all the global interventionists begging the Fed to monetize Euro bonds, we could see a fresh bout of money printing from the Fed.
Remember folks, when the Fed increases the money supply, prices of things tend to rise, or more precisely, when the Fed increases the supply of money and credit in an economy, prices generally react higher and when the supply of money and credit declines, prices generally decline. This is the true definition of inflation as inflation is and always has been a monetary phenomenon with prices being an ancillary factor!
We expect more money printing coming down the pike to have the same impact on gold that it has in periods past, namely, higher gold prices. As all seasoned gold investors know, gold loves to rise after Christmas and straight on through the new year. We would be surprised if gold didn't make a new high in the first half of next year.
As a general reminder, remember to always consult a financial professional when investing with your money.
Happy Investing!
Excellent post! I agree 100% with you conclusions. Good thing i backed up the truck recently on some of the cheap shares- gpr and exn to name a few. Also picked me up some silver coins.
If gold does make a new high in the first half of 2012, i think it's pretty much a lock that silver will as well.