I am sure most of you will recall how Noah let out a white dove from his ark after he thought the great floods were over. And when the dove came back, it was a sign that there was life out there.

I wonder could the same be the case for gold in some small way. The forward signs for gold could be the white dove for investment land that there is life still out there.

Now there are all sorts of views about how gold is a safe haven but I am not sure that I entirely subscribe to that and a weekly chart would show how gold is still in a downward channel. We of course know that gold is tied very much to the US dollar and now that is a tangled web, so I won’t even start on that subject.

There is some life in gold but I am not sure how much. There is a fair chance we could see gold rally short term:

Chart 1

 

click here to enlarge

The above chart is a classical pullback with the oscillator pulling back to zero. If it falls much below zero then all bets are off. And in any case I could also show many charts that suggests gold may well drift for some time yet.

But it will rise again:

Chart 2:

 

click here to enlarge

I would expect we will see a strong gold trajectory in the second half of 2009 after maybe a lack lustre first half. And yes to over $US1000 – an all-time high.

So dust off those old gold stock favourites and get ready to make some money!

For more information about Gold and option selling, please see Commodities Roundup: Gold Still Golden for Option Sellers by James Cordier and Michael Gross, Liberty Trading, Jan 19, 2009 at Optionetics.com.


Enjoy the ride

Tom Scollon
Chief Analyst
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