Capital Gold Group Report: GOLD BULL UPTREND STILL INTACT - BUYING OPPORTUNITY IS NOW
Jun 12 2008 3:37PM
The bigger picture for gold is well viewed on the weekly chart. The correction steps have dampened enthusiasm, but they have not changed the bull uptrend. The hyperbolic rise from last August to March has not seen any move below the $850 impulse high in November. Thus, the long-term bullish picture is intact. A retest of the May low at $855 is in progress. The US Dollar support is bizarre, given the astonishing persistent horrendous negative fundamentals that pervasively worsen with each passing month within the US Economy and US bank system.
In
the entire financial world, the two biggest enemies are gold and
US Treasurys, the trading instrument of the US Dollar. Given that the US
banking officials are up against the wall right now, they will continue
to inflate, and in doing so, they will work to bring down the long-term
US TBond yield via direct monetization actions.
To be sure, a strong
rise in the 10-year US Treasury yield well past 4% toward 5% and beyond
would create forces for credit derivative explosions and the total ruin
of the US and Western world banking systems.
The JPMorgan machinery has kept the long-term rates down far below prevailing price inflation levels. However, monetary inflation on an even grander scale, as is coming next, will be directed into US TBonds, regardless of price inflation. A profound irony, or conundrum, has been that long-term US TBond yields are a reflection of US Fed, Euro Central Bank, Bank of Japan, and Bank of England monetary inflation. The US Fed has cut the official interest rate several times. The market response has been to contradict. The US Fed has lost control.
Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics.
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