Gold is ready to break out again. With many analysts' views on the chances of gold reaching the $900 dollar mark this year rather on the gloomy side, it takes a certain amount of guts to come out with a headline like this, but there are reasons.

Gold's chart patterns may have looked non-committal to bearish up until Friday last week, but there were two pieces of news that caused me to forecast an up-week for gold to Gold-Monitor Members on Sunday, December 9th:

  1. The ECB's Trichet indicated a bias toward tightening its policy next year despite the Fed's desire to "liquefy", and

  2. Iran severed its last remnants to the petro-dollar.

Subject No. 1 was analyzed in ECB Breaks US Dollar's Neck. Subject No. 2 needs no explanation.

This is what the charts looked like on Friday:

Recently, gold has very much been following oil on a day to day basis. The oil (WTIC) chart's megaphone pattern above looks decidedly bearish.

While gold seemed to be tracing out a somewhat lame-looking triangle pattern, tracking the ascending green bottom line much too closely for comfort, its shares looked ready to fall off - and they even did, this week.

But look how different gold looks all of a sudden:

While on Friday the price was threatening to go through the bottom line of the triangle formation, a couple of days later it is very close to the top line and there are only about two weeks left at most to the apex of this triangle pattern.

The dollar has touched its tentative tentacle to the icy blue line of its descending 50 day moving average, found it "too "icky", and immediately wilted away again.

At the same time, US T-bonds and notes are falling out of bed as predicted in Nuclear Bond Implosion only days ago, and reports of unexpected import price surges are showing why the Fed gave the markets only a 'wimpy 'quarter-point funds rate drop while refusing to say that more will be forthcoming. That threw the poor old Dow into drug-withdrawal convulsions.

Please remember: Fundamentals always break chart patterns - but chart patterns never break fundamentals!

The gold price may well be visiting the north star for Christmas this year.

Got gold?

Alex Wallenwein
Editor, Publisher
Just like driving your car, investing only makes sense if you can see where you are going. The Euro vs Dollar Monitor is your golden windshield wiper that removes the media's greasy film of financial misinformation from your investment outlook. Don't drive your investment vehicle without it!

November 14, 2007.

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