GOLD Analysis

[4ow4ow]

Wed, 9 July 2008

Many, including Gold merchants and dealers in my locality, had predicted Gold will rally back to hit 1K border again, and even they had given out an outrageous number above 12-16 hundred in lately years. As was seen in Weekly, two "minor" bottoms were formed to persuade the reading & decision making for Gold buyers.

A rumor that China and India had prepared a large quantity to hedge and protect the Gold to not dip below the nearest major support for current lasting trend. Since they both were the top list of Gold importer when Gold Rush to 1K.

Euro -Gold's second bank-, Australian dollar -The precious gems-, Swissie -The fonder child-, these three major currencies had been gifted by Gold's rally and this may provide a surplus for their financial credibility to maintain discount rates in these past 2 years. Reflected by each currency's persuasively carry-trades, and less-painful of plummeting story. Yen also gained advantage with their fixed policy.

How about US Dollar?
Imagine how bad is, for cutting their head off, from 4% to 1% in 1 year. Fed had no choice but having it done. The middle-guy, no matter what, must prepare to face such risk of -being cooked-. It's not the era anymore who plays the big brother role in the world, because from the scratch of 21th century and after the "great crisis 1997-98", many countries had raised quickly either by geographic-political and by economical factor. Most of investors and speculators had turned their heads for a more promising field that hold major "directly" resources, either it's a tangible one or contains a promising of "rumored and lived" capital flows. Those subjects include mostly European countries, Australia, Canada, Mid-America especially Venezuela, Argentina and Brazil which have a big stomach of Oil tanks preservation, along with China, India, Nigeria, and Russia. It's just a matter of time, for those countries which were 3rd countries to provide a reliable security in their atmospheres, in order to attract more investors and played for a long-term one.

___________________
Back to Gold...

Second leg usually contains such greatest noises rather than the former breaker. There are too much stories in it, ---"late dumpers" who were Buyers trapped in the first leg, an ambiguity psychology's effect for the trend, and many hoaxes for one-way movement---, these criteria help to reduce the momentum that creates a healthy trend. Not yet mixing with those who think it will go back to 1K once more.

Pic1: The line was found many times acted as S/R in the past retracements.

Pic2: Fibofan 76.2 in work. Notice a head and shoulder pattern was formed in this area.