I last discussed the gold price back on 11/20/09. I claimed it was
very overbought but could have a blow-off spike up into the
high 1200s before settling back to $950 in the spring of this year.
Gold did get up toward $1240 oz. in late '09 and did settle back to
$1050 in early Feb., but it has moved up some from there in recent
Gold is now struggling to hold its uptrend rolling back to late 2008.
It has broken the trend twice this year, but the breaks have been
modest and you have to give a volatile medium like gold some "over
and back" chances around a trendline before you can say with
authority that a downside break has occured.
My gold macro-directional indicator has been rising pretty steadily
and strongly since the latter part of 2008. The monetary
component rose sharply over the past 15 months, but is very likely
to settle in to a much more modest trend as major central banks
rein in quantitative easing and special lending programs . Thus,
for its strength, the gauge will be more reliant on the pricing of oil
and a basket of industrial commodities as we move forward through
Updated fundamental research on gold mining now pegs the all in
cost of extraction at $700 oz. for new mines. I have used the new
data to reset my micro indicator for the value of gold up to $650 oz.
and may adjust it higher if the global economy continues to expand.
I continue to regard gold as very expensive and will likely only
play it on the short side from time to time. CHART.
- Peter Richardson
- Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!