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With the thought of a double dip recession gaining some increased following – but not from yours truly just yet – one might think of gold as a place to find refuge until the ill winds blow over. Maybe.
But when we look at near term – both daily and weekly we get:
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And:
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So both charts support more unsettled times for a little while yet and investors might find some comfort in gold in that time.
But at best the weekly chart says that gold may head to about US$1400 – a move higher of say 12%. A decent move still. And if that means there is that much downside in equity markets that again is a decent move. So what guarantees you ask?
I would not stake my home on that outcome but I reckon the first wave is a high probability – around 1300 or about 4.7%. Not so exciting.
But when I look at a monthly gold I see:
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Yes, a wave four pullback for gold by early 2011. Does that mean things in the world might be settling down?
No, because when I look at a monthly DOW it says also down!
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So maybe there is a second coming in 2011 or even later this year.
And clearly enough uncertainty to stop me from buying for the long term!
Enjoy the ride
Tom Scollon
Chief Analyst
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