The US dollar's 50 day moving average (dma) has crossed above its 200 dma, a technical maneuver known as a Golden Cross.  A Golden Cross usually leads to a sustained rally.  You can also see from the chart, courtesy of stockcharts.com, that the dollar has also broken above its overhead resistance line and popped higher as it finally broke out.

If the dollar is rising, then conventional wisdom suggests you should sell your precious metals as a stronger dollar tends to portend a decline in metals prices, right?  Well, no.  Gold has been in a bull market for 11 years and has a few more left to go.  You don't want to sell you metals and then be left watching it go vertical.  A good strategy is a slow and steady accumulation with an eye on trying to pick a final top (easier said than done of course).

It's also important to remember that the US Dollar Index is weighted against primarily the Euro and other paper backed-by-nothing fiat currencies.  Gold can rise against the Euro or Dollar regardless of the direction of either one and often has.

As a general rule, we are not a huge fan of trading in and out of markets because the big gains are in capturing the bulk of the big move and the big move is the long-term gains accumulated over years.  Some traders are successful trading in and out but they are rare.

In our last Gold Update, we showed a perfectly healthy bullish gold chart and our views have not changed since then.  It is important to always go with the trend as the old adage "the trend is your friend," rings true once again.  And the trend is clearly higher as long as gold stays above its 200 dma.

In the scenario that gold does weaken on a rally in the US Dollar, then obviously it will present the prudent gold investor with yet another buying opportunity.  For this very reason it pays to keep some dry powder handy to take advantage of a sale on precious metals if and when they present themselves.

That's all for now and remember to consult a financial professional before making any investment decisions.

Happy Investing!

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!

I recently wrapped up an interview with Peter Grandich, author of 'The Grandich Letter.'  Peter has been one of the most accurate forecasters in modern times, calling the bottom in stocks in March 2009 to the very day as well as the recent top in silver.  Here are some highlights of the interview:

Q:  Peter, you have been one of the most accurate forecasters I've seen in recent times.  In March of 2009, you called the bottom of the stockmarket to the day. Just recently you called the top in silver at $50 and the low at $32.  I wanted to get your perspective on gold.  We were up as high as $1780 today and are down considerably since then.  Do you think we'll see $2000 by the end of the year?

PG: Well, this morning, early this morning, after coming back from Europe, I put out a commentary to my readers, and I guess it could be viewed as good news and maybe not the best of news.  And the good news part, I had spoken in recent weeks, that my long standing target of $2000 for gold, which I had when gold was under $500, that I was raising it to $2350.  A lot of work that I did suggested that it was more of a likely target than the $2000 gold that I've had for several years.  However, I've also noted because of the great movement we had and some technical work, that I was lowering just a bit, my suggested exposure to gold.  I has been as high as suggesting 50% of one's total portfolio allocation be to gold itself and felt that gold had been and would continue to be the single best investment and certainly better than stocks and bonds.  I took that down a notch because I believe from a valuation standpoint and some technical work, that we were overextended here going into today's trading.  Now, if we did catch a bottom in the stockmarket today, it would not surprise me as I wrote again early this morning for my readers, we could walk in and see a $50 or $100 down day in gold.  But don't let inevitably what will happen again if we have that, the constant cries for a gold top or a gold bubble by the people that've been wrong for hundreds if not thousands of dollars, throw you off. That would just be a consolidation and some profit taking in a market that looks like it's now finally getting to what many of us suspected it could and that is where it really gets parabolic.  So i guess my response to you is, still very constructive to you towards gold.  It's not cheap anymore, as I said, but I believe now that it can go higher than I once thought before but we're overextended here for the very short period and some profit taking and some consolidation would actually be healthy and certainly I would welcome it. 

Q:  I was talking to James Turk the other day and he thinks we'll see $8000 by the time the bull market runs its course, do you have a long-term target on gold?

PG:  Well, yes, I just raised it from $2000 to $2350.  I was just with Jim, we just spoke at the same conference in London over this past weekend.  Jim is a believer that the Dow will eventually equal the gold price or vice versa, that they'll be 1 to 1.  One thing I've said and I've said it this weekend and in recent interviews, that what was once called the crazies, the people that talked about $3000 or $5000 or even $8000 gold, suddenly isn't that crazy anymore.  In the last couple days, we've had major regular type investment houses start to really ratchet up their price potential for gold.  Jim Sinclair, who I think is one of the most accurate forecasters even noted at our conference this past weekend, that a close above (which I don't think we got to today), we closed below $1764, I believe that was his number, would set us up for a parabolic rise where we can go up $500 or even $1000 dollars in a relatively short period of time.  What I think right now would be best, markets don't normally do what we think is best, but I do have the belief that the DOW has bottomed short-term here after the close Tuesday, we could see some consolidation and even a sharp correction in gold for a few days to maybe a couple weeks. 

Q:  Since the S&P announcement, silver hasn't responded as favorably as gold has, gold is up $23 today while silver is down a buck and a half.  What's going on with silver?

PG: Well, sometimes when I talk as I'm about to talk, it seems to maybe make some of the real bugs a little upset at me that they feel I'm not as aggressive as I should particularly when silver is concerned.  There have been times, most recently within the last year, when I have felt that silver could outperform gold but I've always kept that during those period of times, that at the end of the day, the real hard big money would seek out gold as an alternative monetary tool before it would silver and silver, although there's clearly a great argument that the amount of above ground silver is not as much as people would like us to believe and that there could actually be a shortage fairly soon, still takes, in my book, a secondary role towards gold.  Now there's nothing wrong with that.  It doesn't have the same big dollar, monetar seeking safety reasons that gold gives.  Now, there are others that think differently about that.  Eric Sprott, who I spoke with at the conference in Europe this past week, is a very very big silver bug, and he suspects that silver will even outperform gold, but what I think what happens is, and what's happening in recent days, is the speculative more of quantity versus quality is what drives silver and those type of players had more exposure in the stockmarket and took profits out of their silver in order to pay for other things that they were losing in and yet they kept gold as a hard core holding.  So,  I don't think there's anything wrong with silver, but I haven't felt that it could outperform gold here and I see no reason to think so unless it really sold off and gold didn't and then from a valuation standpoint, I could possibly place it back in the lead again.  But for now, I think it's gold first and silver second.

Q: Let's talk about the shares for a second.  The mining stocks are not tracking gold higher like you would expect with gold breaking new all-time highs, especially the juniors.  People are become more risk averse it seems and the markets have the feeling that they did in 2008, I was reading one of your recent posts on Grandich.com, and you said and I quote "While it appears the baby is being thrown out with the bath water when it comes to mining shares, the overall great performance of many of the physical metals has made most mining and many of the exploration plays, the most compelling ever in my 27 years in and around Wall Street." Now, that's a bold statement, why do you think the shares are such a great buy here?

PG: Well, the second part of that, and I appreciate that quote, the follow up in the next paragraph was a notation by me that I have basically got egg on my face, my peers too but they may not mention it as I was that the expectation certainly was that based on that great performance in the metals, the mining shares and exploration stocks should have been a lot higher and was anticipated to be a lot higher but hadn't and I used the words that you often don't hear from someone in the financial arena and I was wrong.  Having said that, because where the metal prices are now and how much discounted the spread between shares and the metals themeselves have become, it made me feel I had to state what you quoted and that was that they had become extremely attractive and in an allocation, where I only suggested no more than 10-20%, I raised that allocation to the upper end to 40% for the most risk oriented speculative person.  That was a big step.  I don't ever recall having or suggesting that much exposure to one sector, in this case, mining and exploration stocks.  So as of this morning before the market opened, I would be bold enough to make a stand and say that they have indeed become the most compelling.  Now that's coming from a man that felt they were pretty compelling these last few years, but like you said, are not living up to the hype or hope that many of us gave over these last few years. It's come to the point now, where everything I look at, knowing what's happening in the industry, part of how I make my livelihood particularly on the junior end of companies that it appears that the markets have made them compelling speculations.  I do want to make this point, the word speculation is really a word that Wall Street created so it wouldn't have to say gambling and gambling and speculating is both the same thing.  When one gambles or speculates, you have to be prepared to lose part or all of your capital, and if you are, then they are very compelling. 

Q: As you mentioned, you were a featured speaker this weekend at the GATA Gold Rush 2011 Conference in London.  How was the conference and is there anything in particular that stands out that you'd like to share with us?

PG: With no disrespect to any other conferences I've spoken at, I don't remember a more insightful conference that I've took.  It might have been because it was all speakers, I don't think any public companies spoke that I remember being on the program, they might have but I might not have been in that period time, and the people that did speak did not have a presentation that would get people interested in what they did but was really just an educational and insightful type of presentation.  Whether it was Jim Sinclair or Eric Sprott, or some other speaker or even Andrew Magure, the gentleman who blew the whistle on the silver manipulation, when Peter Grandich is staying in a conference room and sitting in his seat listening to speakers versus when I normally walk away a lot of the time when I'm not the MC because I find that many of the speakers at conferences are making some sort of sales pitches, I thought the GATA conference was clearly better than any I've ever attended. And i think what also came out of the conference, I think there were people from 31 different countries, it was very insightful to hear what the attendees had to say.  I guess because it was a fairly large sum to attend the conference, the people who came there were very serious oriented about that investment area and they were very knowledgable.  I think it was the most knowledgable group of attendees that I ever met. 

Q:  Wow, I really wish I had made it (to the conference).

PG:  I believe they videtaped it and there will be a video tape I guess GATA will be selling and I would check with GATA, and if I know GATA they won't charge a lot, but I will certainly be telling my readers when that video comes out, they should buy it because like I said, in so many years of MCing these kinds of conferences, there's not much that takes me back where I say "wow, that was really worth hearing." But that was basically what I was saying to myself for almost two days. 

Q:  We're definitely going to have to get that when it comes out on DVD.  Tell us about your newsletter and how listeners can subscribe to it.

PG: It's free, it's a blog.  Like I said earlier, part of my livelihood is working for junior exploration companies on the corporate development and public relation side, but no one has to  do anything with any company in order to get and see what I think about the markets.  It's posted on a blog. They can, if they so choose, to provide an email where they can get an email alert at the end of the night where they can get the last 5 posts of the blog, but here's nothing that they have to purchase or provide in order to get it.  And separate from that, I have a business in the state of New Jersey, it's Christian oriented and helps mostly professional athletes in areas of insurance and estate planning.

Me: Peter Grandich, Grandich.com, thank you for being on GoldFiend.com.

PG:  Thank you and best wishes and great success with your new site.

I recently wrapped up an interview with James Turk of GoldMoney.com. James is a true expert in the field of Gold and Monetary History.  Here are some of the highlights:

Q: I wanted to get your take on a possible end of cycle gold target.  In the 1970s, gold increased 25 times and silver went up about 37 times. If we take the $250 low for gold in 1999, and we multiply that by 25 times, we get a target of $6250.  Do you think that by the end of the cycle, we will see a $6000 gold price?

JT: Well, I think that's a little bit low.  Back in October 2003, I was interviewed by Barrons and they asked for my target of when this bull market would be over and I said it would be some time between 2013 and 2015.  My view was that gold would be over $8000 an ounce.  The gold:silver ratio would probably be 20 ounces of silver to 1 ounce of gold, so silver would be $400 an ounce.  Back in 2003, gold was $350 an ounce so $8000 seemed pretty ridiculous in terms of a forecast but it is working and gold is moving in that direction and I think it will continue to move that way but there's a logic to that forecast.  I related back to the 1970s how gold went from its low of $35  to $800 approximately at its peak.  In October 2003, when I had that interview with Barrons, gold was $350 which was approximately 10 x its price in 1971 of $35.  The interesting thing is that it took in 2003 approximately $10 to purchase what $1  purchased in 1971 because of inflation in the intervening 32 years.  So, on an inflation adjusted basis, if gold can go from $35 to $800 in the 1970s, it can go from $350 to $8000 on an inflation adusted basis this time around.  So, I'm sticking to that forecast of basically saying history is going to repeat, history has been repeating and I think it's going to continue to repeat and by 2013, we're going to be around $8000 an ounce, maybe higher.

Q:  As far as year-end targets, do you think we'll see $2000 gold this year?

JT:  It's hard to predict short-term targets, next month, next two months or year end. All you have to be focusing on is to continue to accumulate in this bull market and focus on where the bull market is going.  It's always going to go much further than you expect.  It's probably going to last longer than I expect and go higher than I expect.  Just continue to accumulate.  The gold price probably should be over $2000 now but because of government intervention and anti- gold propaganda by the government. Gold is still undervalued, even though the price has been rising, it's still undervalued by all of my historical measures.  It's not quite as undervalued as it was 10 years ago but it's still very undervalued because what's happening over the last 10 years, even though the price of gold has gone up, the dollar has been debased by inflation and what central banks are doing to mismanage the dollar.  Focus on the long-term and not so much the price of gold but whether it's good value or not.  And it's good value on a numerical basis based on my historical measueres and it's also good value because of its usefulness as a tangible asset.  It's a monetary asset that doesn't have counterparty risk.

Q:  I actually like silver more than gold.  I think we might be going into a hyperinflation and if we do go into a hyperinflation, I think silver might perform a little bit better because it's a monetary metal, it's an industrial metal, do you like silver more than gold?

JT:  I am more bullish on siilver than I am on gold.  And that's why I think the ratio is going to be going down to 20 ounces of silver to 1 ounce of gold in the long-term from 40 ounces of silver to 1 ounce of gold in the present.  Silver will outperform.  The problem with silver is there is more volatility to it than there is with gold and as a consequence the volatility is not for everyone.  But if you're prepared to accept that volatility, I think you have 2/3rd in gold and 1/3rd in silver.  I think that's a good mix.

Q:  I also think, like you, that it's investor demand that's going to light the fuse of the gold market, it will overwhelm the paper market.  58% of gold demand last year went to India and China alone, which is pretty staggering.  You can walk to into a bank in China, you can buy gold and silver.  The Chinese government is urging its citizens to buy gold.  This is in stark contrast to what our government tells us over here, the propaganda we get from our media over here, that gold is a barberous relic, that it's not worth owning.  Isn't it a bit ironic that the communist Chinese might be the ones to liberate the gold market?

JT:  Yea, I lived in Asia for most of the 1970s and one of the things that struck me then is that gold is part of the tradition and culture throughout Asia. If you said to anyone in Asia that gold is not money, they would think that you landed from Mars.  To them, gold is money.  The Chinese character for gold is the same as the character for money.  I don't look at annual supply/demand statistics because gold doesn't get produced and disappear like all other commodites do.  Gold gets produced and accumulated.  So gold mined by the Romans 2000 years ago is indentical to gold mined yesterday in Nevada.  So the supply of gold is this 164,000 metric tons in the above ground stock and what's added every year is inconsequential.  What happens to this above ground stock and more specifically, what happens to gold, gold goes to where the wealth is being created.  What's happening in China and Asia, a lot of wealth is being created there. So you saw, earlier this decade, European Central banks selling their gold and it was being bought by China and other places in Asia.  It also was bought by individuals.  What's happening in Asia is a remarkable event.  You have literally billions of people coming out from a defunct Communist system entering a Capitalist system.  Chinese are hard working, focused on education, want to raise their standards of living, and they're doing that through hard work and wealth creation.  And as they accumulate more wealth, inevitably more of that wealth is going to go into gold.  That's going to create a big factor as to what's going to happen to the price of gold in relation to all national currencies of the world.

Q: GATA has a conference coming up in London, Gold Rush 2011, at the Savoy Hotel Aug 4-6th, where you will be a featured speaker.  Maybe you could clue as in as to what it's all about?

JT: This is GATA's 4th conference.  I'm honored to have been invited to the previous 3 and now I will be speaking at the 4th one.  GATA, I can't speak for it because I'm not on the board of directors or anything like that, but what GATA has made clear is that their objective is to provide educational information about gold and the gold market and they aim for the gold market to be free of government intervention.  I think GATA has been very successful in achieving that aim and bringing attention to the gold market and I think this one will be an important one for GATA to achieve its objectives.

Q:  I love the idea and concept behind GoldMoney, tell us what GoldMoney.com is all about?

JT: It's very simple.  It's a very economical, convenient and most importantly, safe way to buy gold and silver.  The convenience of using the internet is something gold and silver buyers didn't have until recently.  One of the factors that we have is that we're a European based company and we offer storage in different vaults in London, Zurich, and Hong Kong.  While you may want to have some gold and silver stored in your house or buried in your backyard, you also want to have some geographical and political diversification for your gold and silver and that's what we offer with GoldMoney by enabling you to store in different vaults around the world.  We're presently storing about $2 billion in precious metals, owned by 19,000 customers in 87 different countries around the world.

As previously stated in the last press release the intersection in Hole #11-46 (8.12 g/tonne over 15.3 m) is 80 meters west of the mineralization in Hole #11-45 (8.05 g/tonne over 6.5 m) and 100 meters down dip of the intersection in Hole #10-30 (9.22 g/tonne over 11.0 m). The wedges that have been drilled to date have confirmed the continuity of the grade and mineralization.

http://finance.alphatrade.com/story/2011-06-23/CCN/201106231006CCNMATHWCANADAPR_0707636001.html

I love the last sentence about confirming the continuity of the grade and mineralization.  It's a bonus when your mineralization is continuous, it speaks to the face that there's some size with the deposit.  They just have to keep drilling and get a NI 43-101 estimate going for the market to fully value the property.  They are working on the 43-101, so hopefully the market will price in the increased value of the company.