I figured it was time to update the blog even though there’s little good news in the Precious metals markets these days.  You can thank the almighty Dollar for that.  The bad news is that it looks like Gold is headed for a test of the 200-day MA at around 878.50 with the possibility of a return to the April lows.  This proves one very important point.  Markets sometimes go in a direction that you least expect them to.  Under the current economic scenario that we find ourselves in I would have expected Gold to transition from an investment vehicle to an alternate currency.  So far, that has not occured.   There’s the bad news.  Now for the good news!  As they say, it’s always darkest before the dawn!  And Gold will shine again.  Count on it.  The crater that our economy finds itself in is growing and that means far more pain in housing, the credit markets and jobs is about to be felt.  And, eventually, we will see one of two things – A) a decoupling of the price of Gold and the Dollar or B) the Dollar will collapse and Gold will move to all-time highs somewhere north of $2500 an ounce.  I favor the latter scenario but either is plausible and the end result will be the same.  And don’t forget the Inflation monster that is lurking out there on the horizon.  That could be the straw that breaks the camel’s back.  A no-growth economy coupled with inflation that we haven’t seen in decades.  There’s a one-two combination that would put us into a spiral from which we may never recover.  I say that because we’ve just added several trillions of dollars to our debt load in this country and it’s impossible to service, much less pay back the debt, in a no-growth economy that is struggling to keep people working.

That’s it for the doom and gloom.  Let’s talk investment strategy.  First, watch the Dollar.  Since the EURO topped out in early June the EUR/USD rate has traded in a fairly tight range between 1.4337-1.3747.  The EURO would have to break out to the downside before we would see my worst case scenario for Gold which is a retest of  the April lows at around $865.  I give this about a 20-30% chance of actually happening.  If you already own some Gold coins such as American Eagles or Canadian Maple Leafs, then hold on to them.  If you are looking to expand your holdings or haven’t yet begun your “alternative currency” accumulation account then your in luck because Gold is about to go “on sale” at a very attractive price.  But let’s not forget that, even though the Dollar seems unwilling to move lower at this time that doesn’t mean it won’t.  Buying on dips and dollar-cost averaging is always a good strategy in uncertain times like these.

I will keep you updated through this blog or on Twitter where you can find me at www.Twitter.com/bulliondotcom.  As always, you can also email me at daledoelling@bullion.com if you have any questions specific to your own personal situation or you can call our Precious metals advisers at 1-800-605-1792 for current prices on Gold, Silver, Platinum or Palladium.

Good trading,

Dale F. Doelling, Chief Market Analyst

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