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Gold Breakout: Why it hasn't happened...Yet
Pinnacle Digest writes: As our team explained in last weekend’s Volume titled, The SPDR Gold Trust Sets a Double Bottom, gold is continuing its consolidation round and has confirmed a double bottom is in. This does not mean it will be smooth sailing to new all-time highs anytime soon, but the chances of a new low is very unlikely.
Jordan Roy-Byrne discusses the technical aspects of gold in his most recent commentary. He explains that gold has consistently made impulsive advances that were digested by multi-quarter corrections. Following these corrections (or consolidation periods), gold broke out to new highs. During the last major breakout (in late 2009), gold enjoyed an extended, impulsive advance that lasted two years. Previous impulsive advances lasted less than a year.
This time around gold has been a bit slow off the blocks. In previous consolidation periods, gold, within a year, was able to rally back near the recent impulsive high. Roy-Byrne explains that gold will likely rally back to $1800 or $1900 and then go through a multi-month consolidation which would then lead to an impulsive breakout. Conservatively speaking, over the next 12 months, we could see a rally back to $1900 followed by a final consolidation.
Gold's current consolidation is 12 months old. Previous consolidations have lasted between 16 to 20 months. Although gold is consolidating at higher prices, a new all-time high may still be a couple years away.
Roy-Byrne reminds us that the quarterly high prices for gold and silver are roughly $1750 and $39 - far off from the 2011 highs.
Well run gold mining companies, with planned production increases, could very well move to new highs if gold returns to $1750 and silver moves past $35. Our team believes these estimates to be conservative and very likely outcomes in the fall.
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Re: Gold Breakout: Why it hasn't happened...Yet
Ted Butler and the GATA group have amassed tons of evidence that the prices of precious metals are manipulated regularly by JP Morgan Chase and other bullion banks, probably at the behest of the U.S. government. Gold in particular is the "canary in the mine" warning of the rapidly escalating end of the fiat currency system divorced from a gold standard.
There has been a WAR going on ever since the adoption of the Federal Reserve Act in 1913 between "constitutional money" gold and silver coin as mandated, and legalized counterfeit currency that reached its ultimate point of final decline with the repudiation of the gold standard by President Nixon in 1971. Forty years later the general public has not yet caught up with the fact that we need to think in terms of "purchasing power" rather than dollars that have become so debased it is a travesty to still think and refer to them as "dollars" and therein lies the tragedy.
Money is SUPPOSED TO BE a "store of value" but under the fractional reserve fiat currency system it has become anything but. The dollar originally defined as X grams of gold has now become nothing more than a hidden tax through inflation that has reduced its purchasing power to pennies, 3-4 cents at the most. If you want a true measure of VALUE then you have to change your thinking and measure the cost of goods in terms of an ounce of gold or silver.
The MISTAKE that the vast majority of investors still make is measuring the VALUE of gold in dollars which have steadily been depreciating. The simple truth is that it is not gold that has been increasing in price, its PURCHASING POWER has been relatively stable, (except for government interference in the free market) for over 5000 years. The point is that an ounce of gold will still buy the best suit of clothes in town, likewise barrels of oil, bushels of wheat or any other hard good while a dollar is shrinking in value at a rate that it takes more of them to buy any of the necesities of life INCLUDING an ounce of gold or silver.
The time is coming (and rapidly in my opinion) when the banking cartel will lose control of their Ponzi scheme and people en masse will clue into the fact they have been robbed of their lifes savings and will DEMAND honest money and through their purchases of physical gold an silver eventially overrun the "manipulators" who will be exposed for their nefarious schemes to steal what the working man has earned by his/her labour. Truth will triumph when enough people WAKE UP and demand justice and put there investment dollars in REAL MONEY instead of paper promises.
Investing in "DEBT" is not a good idea long term because mathematically "interest" is impossible when only the principal is ever created by the Ponzi scheme fractional reserve system. Neither is it a good idea to invest in "paper promises" for future delivery of gold or silver that may not exist. The actual oz. of gold or silver available may well have been SOLD as much as 100 X and even supposedly allocated gold deposits are suspect. Some banks have already been exposed and fined for charging storage fees on gold they never actually possessed, in other words, you better be sure any gold or silver you buy is either in your possession or is stored by a dependable firm that is audited and actually holds the gold. There are going to be a lot of lawsuits and seriously deluded and angry people when this story unfolds in its fullness.
thinker70