Feb 12, 2007

James Turk: Gold pulling away from $600

GoldMoney founder James Turk, editor of the Freemarket Gold & Money Report and consultant to GATA, writes that gold's low of $604.90 on January 5 appears to have been a "selling climax" and that gold now is pulling away from $600 for good. Turk writes that silver is showing even more strength:

Pulling Away From $600

It has been my contention that the $604.90 low reached on January 5th was a selling climax. For example, see my January 14th alert.

It has now been more than one month since the January 5th low, and the performance by both gold and silver has been impressive. Gold has climbed $62.60, or 10.3%. Silver has done even better, climbing $1.75, or 14.4%. The following charts speak for themselves.

Both gold and silver are showing impressive technical strength, but as I have been commenting in previous alerts, silver is doing even better than gold. Silver's outperformance can be seen in the following chart of their ratio. A declining ratio means that silver is outperforming gold.

The evidence is building that January 5th was indeed a selling climax. There are of course never any certainties when it comes to markets, but as the days go by, the probability improves that $604.90 marks an important low. If so, then gold will never again go back below $600, just like I expect that it will never again go back below $500 (which I consider to be a 75% probability), or $100 (a 98% probability) or fall to $35 (a 99.99% probability).

The $35 rate of exchange to the dollar ended with President Nixon's decision to abandon the gold standard, creating the fiat currency we have today, which brings to mind another probability. Monetary history shows that no fiat currency has ever survived, which suggests a 100% probability that the dollar eventually will be destroyed. But as I note above, nothing in the world is certain. Maybe 'Helicopter' Ben and his cohorts at the Fed will make history, and the dollar will prove to be the exception to the rule and become the only fiat currency that survives. But if you don't like the long odds of that outcome, buy gold instead.


Labels: , , , ,


Post a Comment


Create a Link

<< Home