Chris Puplava over at FinancialSense.com has recently published an article discussing possible strength of the gold market in the second half of 2009.
We provide a link to the article here, and we summarize his arguments below, with our added comments highlighted in red.
Over the last year Chris has developed two proprietary gold market technical indicators which purport to indicate market direction in the gold price. They have certainly proved their worth at indicating market tops and bottoms in the past, and right now they are indicating extremely oversold conditions in the gold market, thus suggesting that we are close to an important low.
There are seasonal patterns also in the gold market, and typically the seasonal pattern for gold is for strength in the second half of the year.
The Market Vectors Gold Miners (GDX) exchange traded fund is also suggesting that we are are close to an important low.
Perhaps most significantly, the US dollar is currently at an important inflection point. Chris goes into this in some detail; we would like to emphasize further that there are important ramifications arising from the “Obama Health Care plan” – if this gets passed, then it commits the US government to considerable extra expenditure – this at a time when the Treasury is already haemorrhaging red ink.