What Does All This Mean for Gold?


I have given up trying to tie gold to economic activity, because the gold markets are managed by the major bullion banks, who clearly want to keep a lid on the price of gold, lest their counterfeiting abilities are lost and they would have to work for a living like most of us have to do. Yet, I think there are limits to what these bad guys can do to us. The chart left shows the average monthly gold price (London PM Fix) and it appears to have built a base over the past year. Both Michael Oliver contractsand Robert McHugh have stuck to their views that gold will have a substantial rally into the latter part of this year, with McHugh holding fast to his prediction of at least $1,425. The Gold Seasonal chart shows the seasonal pattern of gold prices over the past 30 years. This argues for a bottom in the June/July timeframe. And the Money Market Short position (the bullion banks that hate gold) has taken on enormous short positions over the past three years but now it has reached a new high. If for some reason these guys are forced to cover the shorts, we might indeed see an explosion to the upside. A weekly close above $1,233 or a monthly close above $1,218 would, in the mind of Michael Oliver, provide real reason for optimism. Gold could explode to those levels in a New York minute if these huge shorts are forced to cover.

About Jay Taylor

Jay Taylor is editor of J Taylor's Gold, Energy & Tech Stocks newsletter. His interest in the role gold has played in U.S. monetary history led him to research gold and into analyzing and investing in junior gold shares. Currently he also hosts his own one-hour weekly radio show Turning Hard Times Into Good Times,” which features high profile guests who discuss leading economic issues of our day. The show also discusses investment opportunities primarily in the precious metals mining sector. He has been a guest on CNBC, Fox, Bloomberg and BNN and many mining conferences.