Gold at All-Time Highs

Christian DeHaemer

Updated July 11, 2011

Will gold break out?

 gold chart jul 11The yellow metal was pushing an all-time high this morning. Gold for August delivery put on more than $12 to $1,557.20 an ounce at the New York Mercantile Exchange. Last week, gold gained 4%.

Debt worries in the United States and Europe coupled with a slowdown in China are moving investors into the safety of gold…

Gold priced in euros jumped two percent this morning to a new record of 1,104.15 an ounce.

The EU is meeting again today about the Greek bailout problem.

Chinese Inflation

Word on the street is the Greeks are buying up gold as they are afraid of their banking system. But the Chinese are the ones buying gold by the bucketload.

The Chinese are getting hit hard by inflation. China announced on Saturday that inflation surged to a three-year high of 6.4% in June despite five interest rate hikes since October. As we know, it is much easier to create inflation than it is to tame it…

The Chinese now have the option of changing their savings accounts into gold at their bank, and they are taking advantage of this convenience.

It is estimated that China will surpass India as the world’s largest gold buyer this fall. Chinese gold buying has grown in the double digits annually for the past decade, and it is expected to grow 10% to 15% this year.

We are very close to a turning point. If we can break out above $1,560 an ounce, we will be at $2,000 very quickly.

Buy gold.

GM Puts

On Friday I recommended Crisis & Opportunity readers pick up some General Motors puts (NYSE: GM) based on a double top on the major indexes — most notably the NASDAQ, an abandoned baby candlestick pattern on the GM chart.

An abandoned baby candlestick chart pattern is a turnaround signal that looks like this:


doji jul 11


This is a three-day reversal pattern. The first day (white) is a continuation of a bull market. The second day is a doji that gapped up. The third day is a large down day (black).

Today those puts are up 27% and the NASDAQ is down 1.66%.

I further explain what all this means in my most recent Whiteboard Weekly video — a quick, three-minute snippet I put together to explain this latest NASDAQ double top, and to change things up from the daily online e-letter format. You can check it out here.

Oil Falls

Oil has been dropping since the U.S. unemployment numbers came out on Friday. If there wasn’t a clear case of economists being wrong before, there is now.

The United States added 18,000 new jobs last month. Granted, that’s more than the average attendance of an Orioles game — but that ain’t saying much.

The numbers say that private companies aren’t hiring, and state and local government is cutting jobs. That means business won’t expand as fast and the demand side of the oil equation will drop.

Light, sweet crude for August delivery fell to $95.02 a barrel on the New York Mercantile Exchange. Brent crude on ICE Futures Europe fell $2.23 (or 1.9%) to $116.10 a barrel.

It’s Brent that matters on the world stage; the Saudis price oil in Brent.

Solar Power Law

Hawaii Governor Neil Abercrombie just signed a law that will enable more people to buy solar panels. According to the AP:

The legislation calls for the investigation and possible creation of a system where residents could finance expensive up-front costs of solar power installations through their electric bills.

The law will defray costs for renewable energy systems. The biggest factor in using solar is the upfront cost to the homeowner. To be able to pay off the cost over time using electric bills makes sense, as rooftop panels cost about $10,000 per system.

New York lawmakers passed a similar bill last month. This is a bullish trend for panel makers.

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Christian DeHaemer

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Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor’s page.

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