Reflecting on the last week and the previous write ups by everyone, reading the last 5 pages on this site makes interesting reading. On a personal level having been shaken out at 658 I felt I missed out on the lurch forward to 680 but seeing the price now at 642 perhaps it was a blessing in disguise.
Having lost my nerve, I've been placing smaller bets and scalping. Haven't really gained on gold but not lost either (thanks to contributors to T2W).
Looking at my gold chart this week, I'm trying to draw some lessons from previous gold moves as I feel past behaviour often is an indication to future ones if the attributes of the commodity holds true to it's nature.
1. Last summer 05. we have had a 61% retracement in 4 weeks after gold peaked around May 06.
2. We subsequently had another almost 100% retracement in Sep 06.
3. Third retracement occurred in January of this year and that was 61% on the Fib ricter scale.
So gold has been well tested in it's climb and I don't feel it's rise is a flash in the pan. Hence, this week I'm guessing we might see continued drop in gold to 630 levels given past behaviour and then subsequent rise.
In each case above the trend has been a strong upward move. I put this down to the following factors.
- Weakening $ and inflationary pressures in US
- B of P defecit
- Budget defecit
- Geopolitical uncertainties
- Global growth and continued demand for commodities
On the economics side, a slowing US economy is likely to reduce consumption and so imports. I'm not sure about the budget defecit as I can't see any steps for tax increases altough Mr Bernanke referred to it in his speech. With elections round the corner, I doubt it will get a look in until after the event. So I think $ may be fairly balanced possibly strengthening in the short term.
Geopolitical news is very mixed. I'm still bearish on it on the whole. So far there has been some good news and some bad.
The good news is Iran has been talking to South Africa about dismantling nuclear facility.
Iranians have met and talked with the Saudies.
The US having indirect talks with Syria and Iran re: Iraq
US envoy talking to Syria re:Iraqi refugees
Bad news is Russia is blocking UN embargo on trade with Iran
Russia is selling anti tank and air missiles to Syria, against Israeli opposition.
US is developing
tactical nuclear weapons (what is a tactical nuclear weapon? one that you can use on a small scale and get away with? this is like giving a green signal to every terrorist organisation to get one. What on earth are the Yanks thinking?
)
NATO is crumbling under US manipulation (everybody is talking about NATO called on to protect US interests and enforce US foreign policy)
Russia upset about new missile defence systems on it's borders
Afghans preparing for a major spring offensive
US taking over from the UK in Afghanistan
US expert on Russian spies Paul Joyal shot dead in front of his house
China Tells US Not to Promote Taiwan Independence -
China spending more on weapons - biggest to date some say.
As for the outlook for global growth, hard as I try I can't see anything decent with so many uncertainties. It's not exactly a thriving environment to stimulate economic growth and good business. I'm thinking until Autumn this year we are going to trend down on most instruments.
Good trading everyone...
