Eternal Vigilance

Want to know how to make money in gold?  Excuse the age of this article, as it may be over 3 years old, maybe 5.  But it’s pinpoint accuracy in hindsight maybe be a testament to the credibility itself.

North American Precious Metal Stocks

Microscopic bars of gold floating in the bloodstream may someday help doctors find cancers in the human body.

FOXNews.com - Science - Gold Probes Could Reveal Cancer in Your Body

Gee Whiz, the price of gold the last ime a did an article on it must have been about $450.  I am without internet access for a month and gold goes apesh!t.  I dont see any major resistance until the all time high of $887.50.  Look here as gold moves get more vertical each time a resistance level is broken.  You can see them at $330, $354, $386, $414, $429, and the last major resistance level of $529.  How could Jim Sinclair point all these levels out years in the future?

GOLD HITS 18-YEAR HIGH Tuesday, October 11, 2005 - FreeMarketNews.com Economist John Maynard Keynes called it a “barbarous relic.” Wall Street and central banks may have tried to suppress its price, and many financial planners still won’t recommend it. But gold just went up again, and shows few signs if any of retracing its steps in the near future. This week it reached an 18-year high of $477.77 an ounce. A Bloomberg report calls the primary motivation “a hedge against accelerating inflation,” noting that 29 of the 47 “traders, analysts and investors” they surveyed over the weekend “recommended investors buy gold.” The report notes that gold has risen 8.1 percent during the past six weeks as energy prices reached record highs. There are many interpretations for what is going on the markets now. Free-market economists have been predicting a long, steady price rise in precious metals - beginning at the turn of the century - because of the cyclical nature of markets and the predictable outcome of central bank “fiat” money creation. Wall Street, on the other hand, may still see the price of gold from a so-called technical point of view, and regard price fluctations as the result of short-term stimuli. Bloomberg quotes Mihir Worah, senior vice president at Pacific Investment Management Co., as follows, “We’re going to see elevated inflation trends over the short term. A lot of the hedge funds are selling crude oil and getting into gold.” For those in the “free-market” camp, the price-action of gold is the result of larger forces at play. Much as in the 1970s, precious metals prices are responding to a great 20-year burst of money creation that pushed the Dow and Nasdaq to record highs by the end of the 1990s. Markets reacted similarly in the 1970s when the the money creation of the 1950s and 1960s pushed the Dow and Nasdaq to dizzying highs before a 12-year blow off set in around 1970. Free-market analysts and economists would not be surprised if this latest cycle lasted until the middle of the next decade - which means commodity prices could continue to rise along with other assets such as real estate and precious metals. The current rally is the longest since a seven-week run last November and December. Next stop US$500? - ST staff reports - Free-Market News Network

Hit an all time high of almost 5%.  Surging energy prices, low (non-existent) personal savings, and a higher cost of borrowing have combined to produce this record level.  Personal savings rate is -.7%, which means that, after taxes, did not have anough left over, or even enough period, to cover their spending for July.  This is a classic red flag signal for owning gold, a conversation I held with many friends roughly 4 years ago.

Gold hits an 18 year high of over $470 per ounce, and something very wierd is happening.  The media is covering the story.  Just like the media to start talking about getting into something just as it hits new highs.  Don’t get me wrong, I feel very strongly gold has a lot of room to move higher, but I have also participated for the full length of what is already a 5 year bull market in gold.  CNBC is all over golds nuts, I’m scratching my head.  Is the cat out of the bag?

A perfect example of how mainstream media are either complete imbeciles, or they have an agenda set for what they don’t want you to know….

Everyday when I wake up, there is about a 98% chance the first thing I do is turn on CNBC for today’s business news.  There is also an 85% chance the CNBC will remain on my television set for the rest of the day.  There is a 50% chance I might go to the store, get some lunch, use the restroom, and a 50% chance I will be playing poker here, blogging here, or watching stocks.  Whats my point? 

Given how much I watch/listen to the talking heads on CNBC, not once in over 4 years have I heard a mainstream source wonder what higher gold means for inflation.  What I have heard numerous times is the talking point that “There is no inflation, so gold must be ready to crash again.”  Over four years, gold has been the best performing sector.  Physical gold has outperformed the DOW by 37%, NAS by over 50%.  Gold Funds have been known to be up over 100% in 3 of the last 4 years, and some grow over 100% every year.  What’s my point?

My point is, this morning, Conchita whatever her name is from CNBC, reports to us that gold is just underneath a new 17 year high, and they are watching for it to break through.  I had to do a double take at the TV.  Aside from any contrarian point of veiw, this is most definitely a first.  Only now, after Gasoline averages hit an all time high of over 3$ a gallon (yes that is adjusted for inflation), Real estate sectors have gone up almost as much as gold, tuition is in double digits increases every year, and I lost track of health care increases, but I can tell you my cost of living wage increase I get once a year has been forfeited to help pay for my health insurance.  What’s my point?

The writing is on the wall, and gold is going to expolde.  Only this time, people will be hearing about it.  It will be the buzz.  I suspect it will reach a peak about when gold is topping short term around $530, which I will also guess is when most people will be buying gold, which I will also guess gold will have a harsh correction as ALWAYS, and the new investors will get burned, swearing to never buy gold again.  What ever happened to buy low sell high?  May I provide an example?

Larry Kudlow, a man which in my opinion should do hard time for crimes against investment humanity, calling for gold to go down when it hit $330.  He said theres no inflation, gold is’nt going higher.  Then gold hit $350, and Kudlow even had a guest on who said if gold hit $360, our economy would be in serious trouble.  Then gold hit $378, and Kudlow calls for a top.  Gold hits $400, and Kudlow is bearish, then $414, $430.  Now gold at $430 is a new 14 year high, and guess what Kudlow does, genious that he is?  He announces “Allright, gold is the real deal!  I’m buying into gold, this is it”  Well then the next day, gold goes down 8$, and then 6$ the next day.  Kudlow loses his ass.  Everyone saw him lose on gold.  He swears off gold.  You really want your info from a horrendous investor like this?  Or maybe there is more to it?  Larry Kudlow is my sell signal, rather when he buys, its time for me to sell. 

-Eternal Vigilance

The 6$ rule has again been breached, with gold up over 8 dollars today, only the 5th time in 4 years gold has made such a 1 day move.  More interesting is the fact the gold has broken the 6$ rule twice in the last 2 weeks.  Get ready to make some serious jing