A number of candidates qualify as hot markets currently – notably, stock indexes at their lowest levels since 1997 – but what could be hotter than the gold fever caused by $1,000 gold?
- After mystifying traders by not taking off while the financial world seemed to be collapsing all around them, gold prices shot up in the new year to reach $1,000, a key psychological level, and appeared ready to challenge the record highs of mid-March 2008.
- VantagePoint provided two important medium-term moving average crossover clues (red circles) that coincided with traditional chart breakouts that would have gotten traders long around $850 an ounce and than again around $930.
- Investors are clamoring to buy record amounts of gold in many forms – from coins to bullion to exchange-traded funds – a fundamental factor suggesting the buying frenzy could continue.
- Some investors are buying gold because they want a real asset in case hyperinflation results from the Obama bailout economic stimulus plan and huge increases in government spending.
- Other investors are buying gold because they want a real asset as a store of value and safety in case deflationary pressure causes further deterioration of the financial system.
- In either case, it appears investors will hoard gold and won’t sell easily, further tightening the supply/demand equation.
- Whether gold continues to rise depends on how these forces play out and whether gold can overcome resistance at $1,000 when the world wants cash and has less money to spend for gold or any other commodity.
Source: VantagePoint Intermarket Analysis Software
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