Tuesday, January 2, 2007

Gold - Yes I Remain Bullish

And I'm not going to throw up (something the shorts are doing) a chart. We know about the triangle formations, 50 or 60 week moving averages, and the recent cross of the 50 dma over the 200 dma. I'm also not going throw up (again, those shorts at the bucket) a chart of the dollar/euro. I'm a big TA user having had the benefit of a free Bloomberg Terminal at my job for 14 years.

Here's the real reason why I'm bullish on gold:

It is the annual document put out by the U.S. Treasury: http://fms.treas.gov/fr/06frusg/06frusg.pdf summarizing the Federal government's books. Its 168 pages of not so fun reading, but even the Executive Summary in the first 10 or so pages answers why the contrived M3 has been inflated and why the dollar is in trouble. The Treasury itself admits that in current dollars our total deficits for promised future benefits has crossed over the 50 trillion dollar mark (see page 10).

This doesn't mean gold shoots straight up without ever looking back, it will get overbought and correct, but it seems the most bullish of fundamentals are at hand.

Tonight gold is up another $5 to above the $642 mark. GLD left off Friday way down at $63.21 will have some catching up to do in the morning if gold can hold to these levels overnight.

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