New highs or a decline?

26/08/2010 by Philinje.

Analysis that I read seems split on the near future of gold. Some see new highs coming right up. Others see an imminent drop. Certainly price action has been impressive this week, especially in silver, and in the face of options and futures expirations (today and tomorrow).

Today gold is dropping with a rising Euro, so again, my theory about the influence of the Euro on gold is being affirmed. Gold got to $1244 earlier today, and it still hasn’t approached the last all-time high at $1260. But maybe it will shortly. Silver spiked past $19 and might get past its recent high of $19.86, but this kind of behavior has in the past couple of years preceded a sharp drop.

So all in all, we might be near a short-term top. Or maybe we’ll get a little past the highs and take a breather. One thing for sure is that the summer is almost over and there has not been a serious decline. September is typically a strong month. It seems like buying power is strong.

To put all this perspective, here is a great article on the big picture:

http://www.caseyresearch.com/editorial/3614?ppref=CRX192ED0810D

I agree with this author. If gold drops to $1100, that ain’t such a big drop in the scheme of things, and it’s getting less likely. If it drops to $1000, time to jump in big time, but we may not get the chance. Anyway, a difference of $100 in the price is a small difference in the big picture.

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