Gold Hits Record High

Happy Tuesday Everybody,

Today was a little more happy than normal around The Dollar Vigilante as gold hit an all-time record high today, peaking at $1,267.20 USD.

Our stocks, which mainly consist of gold & silver major and mining juniors as well as gold & silver bullion itself have performed exceptionally.  Our last junior recommendation, issued August 15th to Full Subscribers is up over 20% in less than a month.  Considering what the annualized return extrapolates to that is a very, very nice gain for a few weeks!

We are releasing our next junior recommendation tomorrow (Wednesday, September 15).  Try out our Full Subscription for only $25/month and receive these incredible investment recommendations from our one and only, Ed Bugos.

Speaking of Ed, I’m sure this gold breakout is one of the topics of most interest to many Dollar Vigilantes and so let’s get right down to it and ask Ed what he makes of it:

Thanks Jeff,

Today was a buy signal if I ever saw one… yet I’m apprehensive.

The market looks determined to go higher.  That’s good and bad.  I have a $1400 target high for 2010 which is looking conservative now, so that’s good for our gold related investments.  It is bad because gold may be signalling something quite market-changing about to happen and we won’t know what it is until after it happens.

In this economic backdrop a shoe could drop from almost anywhere that the Fed does not have a microscope.  We heard rumors today that the Bank of Thailand was a buyer.  But this is no catalyst.  It is old news now that the central banks have turned into net buyers.

What worries me is the widespread expectation of another Fed easing.  The case for that is compelling but widely expected.  It is in my opinion the most significant driver of the advances across the board –in stocks, bonds and commodities…and explains the dollar’s renewed FX weakness.  If this expectation is a bubble that pops if the additional easing never comes then everything will fall, including gold.  I have no idea how that’ll play out.  Fundamentally, however, it is really of minor consequence, as it has little to do with the general thrust of banking policy, current or future, but in the short term no one cares about the fundamentals.

Technically, however, today’s break out through $1260 is bullish.  Sentiment measured by Hulbert reached a bullish extreme last week, but as the market began losing momentum on Thursday, Friday and yesterday, sentiment dived among letter writers – worried about a third potential failure from the $1260 level from where the bears had successfully pushed back two previous rallies.  My interpretation of the chart here is that we are breaking out of a 4-month broadening (fan) formation (I thought we’d pull back first) which has an objective of about $1375, which is pretty much where our target suggests gold should be.  So it looks like it maybe time to stop second guessing the short term moves and get on this train.  The corrections will come but probably from higher levels now.  The bull is gaining momentum.

We are indeed at the foothills of a mania.

Cheers,

Ed

 

It is definitely going to be an interesting October issue of TDV on October 1st.  So much is happening this month it is hard to keep track of it all.

However, from my perspective, one of the most interesting things about this move is the fact that silver AND gold both were up strongly.  Silver has tended to move more WITH the overall stock market and traded more as an industrial metal for the last few years.  However it now may be indicating that it is dropping its industrial persona and returning to its traditional role as money.

Meanwhile, for those that aren’t subscribers or are new subscribers and haven’t gotten a full position in our gold & silver holdings they may be thinking they are too late.

While ANYTHING can always happen in the short term, this party is just getting started.  As Ed so perfectly put it, “we are at the foothills of a mania.”

How can I be so sure that we haven’t reached a peak?  If we had, we would see headlines such as the one below.  However, instead of people rushing to gold shops to sell they will be rushing to buy.

Calgarians Rush to Sell Gold After Record High Hit

When we start seeing headlines of people lining up for hours to buy gold then we will know we are closer to a peak.  However, given that the global fiat financial system will likely have collapsed when this occurs the question will be, “sell gold for what?”.  You certainly wouldn’t want to sell your gold for any fiat currency at that point.

So, what is the answer?  We don’t know… because we aren’t there yet.  But that’s why you want to subscribe to The Dollar Vigilante.  Because we will be covering the coming Dollar crash all the way through to its end and beyond.  Meaning we will have insights and recommendations of not only when to sell your gold & silver but also, for what.

Until next time, thanks for reading!

Jeff Berwick

Chief Editor