What’s Happening in the Gold Pits and When to Expect a Change in the Price Trend

Our in-house gold guru, Robert Appel, BA, BBL, LLB, issued an e-mail alert a few days ago, which I’d like to share with my Profit Confidential family of readers:

“We wish to thank those readers who have commented that our publication has evolved into one of the most informative gold letters they have found. In fact, that was not our original intention.

The rise of gold in an era of unprecedented fiat money printing; massive deficits; loss of manufacturing; stubborn unemployment; diminishing quality of available jobs; un-natural relationships between bankers and politicians; contagion into all developed western nations (including Japan!); the state becoming the final purchaser of its own debt in plain sight—all these events in the normal course should NATURALLY cause gold to rise to a higher level, and bring the mines with it.

What level? For about a century, an ounce of gold purchased one Saville Row suit. Today the cheapest such suit is $3,000 and gold is ‘market priced’ below half that number. Keep this information in mind the next time someone tries to tell you that gold is overpriced.

All the above should have taken place naturally and easily. Our original intention was to have gold be merely one investment option of many. However, as we began to grasp the magnitude and horror and brazen-ness of the state’s intervention in allegedly free markets, the focus of the letter shifted. Our position now is that the excessive force used by the state to stifle these markets will result in an equal and opposite effect over time.

What is happening right now?

For several sessions gold bullion has been struggling in a narrow range between approximately 1290 and 1330 [dollars per ounce]. Similarly the mines have been hanging on for dear life in the area above gap support.

This is called ‘Tension on the Tape’ and shows a major struggle between buyers and sellers. These struggles always break one way or the other. Our view is that, if the break is up, it will scare the shorts and the market will turn bullish. If the break is down, the new short-term damage will need time to heal. Look to post-Labor Day for the next trend change.

Mainstream media will tell you that the gold market is reacting to news (jobs, GDP, etc.). Nonsense. These news reports are used as an excuse to explain the always-strange action in the gold pits. The real explanation—and one that historians of the future will acknowledge when they look back—is the gold wars.”

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