The Crunch Week For Gold Is Here

Gold and its running mate, silver, have opened this week at their highest levels since late October last year. After a tentative few hours of far East trading, the London open saw gold prices gather strength to $1335 an oz and be sustained to within a dollar in the first half hour of the New York open. Seems that this Mondays trading is setting the scene for a crunch week for gold.

Support a Springboard For Higher Prices

We advised our readers to wait developments for three weeks back at the beginning of February, since when the gold price has progressed steadily from $1240 an oz when we wrote on the subject. At that time we felt that there was room for doubting that any rise from its previous corridor of trading between $1240 and $1260 could be sustained.

Now we believe that gold is genuinely shaking off its long term doldrums and is poised for breaking into much higher ground. The charts point to a support level of $1330 an oz., a level that should provide a spring board to higher ground. As nothing can be taken for granted in the investment world, the caveat is that the $1330 support holds.

Increased Bullishness Driven by Fear

Bullish sentiment for the yellow metal seems to be gathering pace with speculators holding more bullish positions than for ten months while bearish positions are down by the largest level since last October. Apart from the strong fundamentals that this writer has been proclaiming for what seems like years, (over four) a new fear factor has entered the arena. Developments in the South China Sea over a small unimportant group of islands, controlled by Japan but which China claims, could escalate, and many are the reasons that the Chinese dislike the Japanese. The US may be drawn into any conflict that may occur.

We also note that the US is advising Russia to keep out of the Ukraine uprising. No chance, the Russian Mediterranean fleet is based in the Ukraine as it is Russia’s gateway to the Med. This is yet another crisis the US should keep its nose out of.

Then we have Syria, another temptation for the US to go to war as negotiations and peace talks fail yet again, and lurking in the background is another of the US long term enemies, North Vietnam.

US Economy Built On Shifting Sands

It is not just the increasing international potential flashpoints that are influencing the gold price, investors are becoming aware that the recovery widely reported in the US and Western Europe is showing signs of faltering, built on the back of quantitative easing, aka money printing, the economies are like edifices built on shifting sands making them liable to collapse without warning at any time. One goes the others will likely follow – just like a house of cards!

Buying Gold This Week

Finally many chartists are finding favorable patterns in the gold charts, resulting in a few changes of heart starting amongst the many analysts who have been publishing their pessimistic outlook for the metal this year. If this is not a crunch week for gold then it will be for us as our few hard earned pennies are being put to work buying the yellow metal in the expectation of both some quick speculative profits and a few more ounces to add to our long term stash.

This post The Crunch Week For Gold Is Here appeared first on Precious Metal Investment | How To Invest In Metals written by John Lloyd.