Wednesday, July 1, 2009

The Shiny Coin

Mankind's long term stable currency (gold) took a nice dip yesterday below $930/ounce. It seemed like another invitation to purchase for the following reasons:

1) Fundamental: All of the world's major powers continue to print enormous amounts of paper money. Big Ben and Barack are printing at a record pace that can only lead to the debasement of our currency. Most believe that gold is the ultimate inflation safety net.

2) Technical: The gold price chart reveals a pattern recently that some describe as an "inverse" or "reverse" head and shoulders. It is believed to lead to a breakout upward in price.

Gold Chart ($/ounce) - My Recent Buy Points In Blue

Gold Chart ($/ounce) - Reverse Head & Shoulders Pattern

Reverse/Inverse Head & Shoulder Examples

Chart Source: Investopedia

$1000/ounce appears to be the major psychological barrier. I believe that a breaking of this barrier will lead to much higher prices in a short period of time.

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