Following is an interesting comment on the intermediate and long term prospects for gold published over the weekend by Mark Leibovit in his weekly Gold Letter. The comment is entitled “Keep Your Pedal To The Metal”. by Don Vialoux Timing the Market
“I have no choice but to continue pounding the table on gold. Last week I presented to you ‘seasonality’ charges from the past ten years which clearly point to the fact a big rally is coming whether right away or after summer doldrums. Frankly, I would not wait. The contrarian in me suggests that if traders all have their finger on a trigger to buy gold on a pullback, that pullback may not come. Later, when gold surges to new highs and the non-believers jump in, perhaps then we see a correction.
Fear pervades the trading pits, the financial websites, and the financial media that the U.S. Dollar will suddenly explode putting the kibosh on gold. I don’t believe it in a New York minute. The U.S. Dollar is terminal. The vermin in Wall Street, at the financial institutions (the bankers), at the Federal Reserve, at the U.S. Treasury and in all branches of government are in part all to blame for the state of the Western World’s financial ills. Gold is telling you that it has become the new store of value – one of the only safe havens on earth. The train has left the station, so I suggest you quickly jump on board.
When gold reaches my new target of $3600 in the next few years that may turn out to be only a resting spot before we launch to even higher levels. Imagine what could be happening to silver in such an environment. Meanwhile, one important real question is WHEN will either QE3 or a step-child of QE3 begin? Do we need to see equity markets collapse a couple of thousand points first or will Bernanke secretly begin doing his magic behind the scenes? When China expresses interest in possibly helping bail-out Greece, we know the dynamics of the world have change and the West has lost its prowess. The U.S. Dollar will sink as China and the renminbi gain prominence. Ask yourself where are the Chinese putting their money? The answer: Primarily into natural resources including gold. They are preparing for the future. Where is the U.S. putting its resources? It is printing money, giving it to deviant bankers, foreign bankers, and other ‘friends’ at zero percent interest rates. In other words, it is going into their pockets. Keep your pedal to the metal, folks. The party is still very early.
Editor’s Note: Mark Liebovit has a remarkable history of making timely calls on gold, silver and precious metal equities. Tech Talk suggests that gold is approaching an important inflection point. Technicals for the seasonal trade are not there yet, but are getting close. A resumption of a downtrend in the U.S. Dollar is a likely trigger for start of the trade.
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