3/21/10 A Technical Look At The Gold Price

Precious Metals Market Analysis, By Michael Pennington (Copyright 2010 Pennco Coins)

We know that the fundamental view of Gold remains very good and unchanged. Let’s look at the chart below and examine what the technical chart is telling us:

The technical chart of the Gold price shows a core pennant pattern that begs to escape the clutches of its tightening boundaries above and below. Stability is evident, but in a queer fashion, as nothing is stable globally, and everything financial is in crisis mode. That is hardly the framework to encase a stable Gold price. The long-term trend is up, seen in the still rising 200-day moving average. The 50-day MA offered support in late February. A stealth rally in Gold starting in April is my forecast. Reaction to broad fresh new economic weakness in both the United States and Europe will trigger a second formal round of Quantitative Easing, the euphemism for grotesque monetary inflation and organized ruin of currencies. When the Gold price moves beyond the upper pennant barrier, it will probably move quickly.

Absolutely nothing has changed in the global pursuit of ruinous monetary inflation, as all Western currencies are fatally damaged. The monetary growth is at full throttle. Estimates for US Govt deficits are periodically being revised upward. The US Dollar continues to benefit from the structurally damaged alternative pseudo-reserve in the Euro currency. Look for short covering to blast a hole in the FOREX market soon, as the Euro will begin to race higher when either kind of resolution comes. If Greece is expelled, the Euro will look trim, especially upon instant expectation of expulsion quickly of Italy and Spain. If Greece is rescued, then a new wave of profligate bond rescue will indeed occur. But the cloak of uncertainty will work to lift the defective Euro currency and lead to a short cover rally. Either way, the US Dollar will resume its decline, the tail on the Euro dog.


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