Gold is going to US $4,271.92, and much higher

For the last year or so there has been a lot of commentary with respect to money flows from more risky investments like stocks, commodities and gold and into the so called safe havens like the US dollar and the 30-Year Treasury.

That’s the message heard day and night on Bloomberg and CNBC and they bring in one expert after another to back them up. They’ll sit there and beg the question knowing full well what the answer is going to be. It always struck me as far fetched that paper assets emitted by the world’s largest debtor, and backed by absolutely nothing, could be considered a safe haven.

Meanwhile gold has been money for more than three thousand years and it is considered to be risky, speculative and down right dangerous by the gurus that fill the airwaves with their prophecies.

For months both the dollar and the bond have been on the rise in spite of QE2, and the more recent stealth QE3 where the Fed issued US $600 billion in swaps with the EU, who then loaned that money to EU banks, who in turn bought EU sovereign debt.

If I’m not mistaken the EU got into trouble in the first place because of too much sovereign debt, so now they are going to issue more using American money. Is anyone out there familiar with the term sucker? I now believe that the FX market realizes that the Fed has gone too far, and will probably go a lot further down a very bad road. That means that we very well might have seen a top in the dollar and it is beginning to discount the inevitable.

In spite of a new high of 81.78 posted on Friday January 13th, there was no confirmation of the high by the RSI, MACD or the histogram. This week saw a continual decline in the US dollar and a break and close below the bottom band of a trend line that goes back to the late October low. This is not the final nail in the coffin, but it is a nail nonetheless.

The key as to whether or not the dollar can continue to move higher will be its ability to hold above the support line that connects the last two significant highs and currently comes in around 79.62. Also, I will be very interested to see just what if any fiat currency will rally against the US dollar.

This is a relevant question since we all have to carry some sort of paper in our pocket. My bet is that the Swiss Franc has bottomed and will begin its climb higher in spite of intervention from the Swiss central bank.

One more thing and it’s perhaps the most important observation of all. For more than a year we’ve seen a move away from the US dollar as a means of settling international trade. It started with small pacts between China and Brazil and China and Venezuela. Then it spread to Venezuela with Iran and China with Iran.

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Tags: Gold analysis, gold forecast, Gold future prices, Gold futures, Gold investment, Gold news, Gold price, gold price 2012, gold price forecast, Gold prices, price of gold, Spot gold, Spot gold price

Posted by admin on Jan 23 2012. Filed under Gold predictions. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry