I Have a Feeling a Big Move in Gold is Coming

spotgold20090930 Based on all the charts I look at, both broad market and gold market, I have this sense right now that we are about to see some big moves in both markets in opposite directions.

The gold market right now looks like it wants to catapult to a new all time life time high.  I have mentioned in previous posts that as long as spot gold remains above 988 on a closing basis that I would still be adamantly bullish.  There has been some talk that the breakout in the gold price was not convincing enough and that it did not show conviction and therefore is bound to fail.

The way the chart looks now and the way the mining stocks behaved today tells me otherwise.

Could it be that we are about to see horrible economic data in the coming two days (ie. a spike upward in the unemployment rate) that blows away the ‘economic recovery’ case and plunges the stock market and shoots gold to a new life time high at the same time ?

It is possible, but it is just a theory of mine for now.   If we get MASS fear during October and severe price declines in the broad market, we could very well see gold get some fuel from that and the mining stocks as well.  That is what the charts are telling me right now anyway.

The fly in the ointment though is that the US Dollar Index still looks like it wants to bounce higher big time.  If that happens it ought to correct the stock market, but will gold be able to keep moving higher in that scenario?

It is all a bit confusing to me and a lot of it seems to hinge on whether we are headed into a massive inflation or deflation scenario.

But I just have to respect the charts and the GLD ETF chart is telling me gold wants to pop higher.  The broad market charts are telling me they want to correct lower.  I will stick with that consensus for now and not worry too much about the dollar.

Another scenario is that the dollar index starts falling in a free fall or panic which causes gold to breakout and the stock market to diverge and also fall with the dollar.

So many options and choices here!  But the gold market is sending a clear message to me that it does not want to breakdown any time soon.  That is what I saw in this market today.

Posted in Commodity ETF, ETFS, Gold Market
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