Another 25-Year High

Gold closed the month of April at $651.80. It is the third highest monthly close ever recorded, and gold is rapidly closing in on #2 and #1. The second highest close was $671.50 in September 1980. The record high close was $681.50 in January 1980. Those levels are only $19.70 and $29.70 above April's close.

Some important observations can be made about the above chart:

1. Gold is only a chip-shot away from making a new monthly closing high.
2. Gold has broken out from the 'flag' pattern (marked by the parallel green lines) that confined it for twenty-five years.
3. Gold's upward climb is beginning to accelerate.

All of the above points are bullish. Gold's bull market is alive and well.

I'm already on record as stating: "I've been saying since December that I do not believe gold will go back below $500 - ever." Given gold's continued strength, we now have to seriously consider the probability that gold will never go back below $600 - ever.

The flight from fiat currency around the globe is accelerating, so the safety and security offered by gold remain compelling. In fact, more and more people are recognizing that they are better off holding gold instead of fiat currency, and the buying coming from gold's new converts is helping to propel gold higher.

Silver is doing well too.

We've been following silver's breakout from the pennant formation on the above chart. Its uptrend remains very much intact.

There have been an increasing number of predictions in recent weeks that the uptrends in gold and silver cannot be sustained, but these forecasts are missing the main point. Watch what IS happening rather than what COULD happen.

Focus on the trend. Trends often last longer and go much further than we expect. So rather than worrying about when the inevitable correction may occur, we should instead be enjoying the moment. Enjoy riding this wave that has taken gold and silver to ever higher prices. Be guided by Mae West's words of wisdom: "Too much of a good thing can be wonderful."

The uptrends in gold and silver are not a cause for concern for those holding gold and silver. But there can be reason to worry if you are holding too much fiat currency and too little gold and silver.

Published by GoldMoney
Copyright © 2006. All rights reserved.
Edited by James Turk, alert@goldmoney.com

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