According to expert James Carrillo, gold has hit its last area of resistance when it hit $1,680 level. It has now turned into a buy signal on long term, mid term and short term models. With the continuation of loose monetary policies and growing inflation, gold will be very bullish.
James M. Carrillo
January 27, 2011
Technically gold hit its last area of resistance when it hit $1,680.00, we now have a major breakout with a weekly close above the $1,680.00 level this Friday. This is an all out buy signal on all three technical models (long term, mid term and short term) and should not be ignored. Very rarely do you see all three technical models screaming to buy or sell with such strongly matching fundamentals.
This should trigger massive fund buying and a rapid resumption of the bull market in gold. The fundamentals for gold have been very bullish, but technically it has been in a corrective phase since September.
With interest rates at historical lows and a Fed commitment to keep them low until the end of 2014, massive government spending and loose monetary policies, inflation will begin to raise its head as the Fed wishes. People will begin seeking yield over the coming months and years as the Fed attempts to reflate the system. Make no mistake, these loose monetary policies are intended to stimulate inflation.
Lately the US Dollar has given people the illusion of a safe haven however, the dollar isn't really a safe bet at all it's short term rally has been because people have had paralysis with what to do with investment monies and that it is perceived a safer bet vs. Euros. With that much demand, the dollars rally was ridiculously weak. Fundamentals dictate that the dollar is the worst place to park money over the short, mid and long term. When the technicals of the US dollar change to reflect its true fundamentals, gold will most likely go into a hyperbolic surge. I still see gold prices nearing a 2-1 ratio with the stock market, as it has in past decades of economic stress or possibly closer to a 1-1 ratio as it did back in 1980. At today’s level, that would mean gold would be, at minimum $6,000.00 with the Dow at 12,000 some point during the decade.
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