Gold? New high? Why you are surprised? 11/23/09

Gold?
New high? Why you are surprised?
People said this may be a manipulative move. Someone picks a low-volume time in the market to move the price to force people to buy in a panic. I am panic now. I am holding longs and I want to add more.

Usually gold and dollar have inverted correlation, simply because gold, as well as other commodities, is priced in dollars. But history also tells us if in financial and economic crisis, fundamental favors gold. It will move on all alone. This is the beauty of gold as compare to other commodities. Since this depression, investing structure has been changed a lot. People are now more in favor of physical investments. What will you favor? Gold the physical yellow metal or some derivatives from aig? In recent weeks, we see gold keeps on making fresh new highs even when dollars had meaningful bounce such as Friday.

Strong $? What a joke. You think Ben can defense $ by just talk some talk? It is just to provide some bargain power for Obama’s Asian visit. As long as interest rate stays low, there is no strong dollar nowhere. The fact is dx had been rejected couple times at 20ma. How strong it is?

All the reasons for long I pointed out are still there.
I want to add the China play. Well, nowadays I have not seen any research report not have China in it. This is how important the country is. All hard numbers indicating China has already got out of recession. I expect China to be the largest gold consumer in 2010.
Decrease of the use of hedge is another driver. Since 2001, gold miners have decreased hedging for about 90 million ounce. In q3, gold hedge dropped to 11.5 m. In theory, the reduction of hedge helps the gold spot price.

Now the chart reading:
Weekly and monthly charts are very strong. On daily chart, we still have HH HL. The possible H&S is gone. BB is expanding. Target remains at 1200.
However I expect some small bounce of dx recently, thus gold may range another 2 weeks or so. Overall since 1100, a lot of speculators jump onto the boat. They may take profit at any time. Also for Xgiving long weekend, a lot of funds will reduce their positions. I will hedge my longs.
Today's range could be 1154-1168.I will add long below 1155 with stop at 1146 and short high with stop at 1169.