GoldMoney Alert - 2 September 2007

Nearly a Record

Gold ended August at $673. Believe it or not, but it was the third highest monthly close ever achieved.

The two times gold closed higher were January 1980 and April 2007. The month-end price on those two dates was $681.50 and $680.50 respectively. So gold is only $8.60, or 1.3%, away from making a record monthly closing high.

Gold has of course closed at higher prices intra-month. But I put greater significance on the closing price at month-end. That’s because everybody prepares – individuals and financial institutions alike – their financial statement and marks-to-market the value of their position on the last day of the calendar month. As a result, the end of month price has an important impact on people’s decisions.

Consequently, it is very significant that gold ended August as strong as it did, particularly given that August is typically the weakest month of the year for gold prices. It bodes well for the future, which is the same message seen in the following chart.

The above chart is very bullish. Note what happened in the 1970’s on two occasions after the gold price started pulling away from the green uptrend line. Gold is again pulling away from the current green uptrend line. Will history repeat? I have drawn a third red oval to match the two red ovals in the 1970’s in order to provide a visual indication of what is possible from here.

Basically, I expect $700 to be bettered soon and to see $800 before year-end. If those targets are achieved, then it is reasonable to expect a 4-digit gold price (i.e., a +$1,000 gold price) sometime in 2008.

The prospects for silver remain bright too, even though it is not close to achieving a record month-end price.

The above chart shows that silver remains within a huge basing pattern. This is a pattern of accumulation of silver by strong hands, and we should continue accumulating it too.

Both the gold and silver charts remain bullish. Both precious metals are safe havens from problems with the dollar. Those problems are getting worse, making the precious metals the safest place to put your money.

Published by GoldMoney
Copyright © 2007. All rights reserved.
Edited by James Turk

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