Should you buy gold?

Remember the old saying?:

"Buy low, sell high!"

Well that little quote has some truth to it. Don't get caught up in the buy gold mania. A smart investor picks up undervalued assets when they are making new lows.....not making all time highs. Now is the time to be selling gold, not buying it. I will pick up my gold in the $600/oz. range in the coming year or so.

Gold - Continuous Contract

Dollar Rally Looks Imminent

There are a number of reasons for the U.S. dollar rally right now:

• Extreme dollar pessimism (only 3% dollar bulls)
  
• Euro overvalued
• Other countries, such as Great Britain extending their quantitative easing (printing money) programs, the U.S. did not.
• Gold is extremely overvalued. They are pushing gold on television, if that is not a screaming sell signal I don't know what is. The gold trade is wayyyy to crowded.
  
• strong deflationary headwinds in the economy (rising unemployment, retrenching consumer, banks are ABSOLUTELY NOT lending....etc..)
• Should the market fall (and it will) the dollar will rise because of the huge margin calls needed to liquidate assets fast, and the urgent necessity to raise dollars to settle dollar-denominated contracts. In other words, another severe financial crisis could lead to another short-term dollar rally.
• Also, the technical picture supports a rally in the dollar....as expressed by the chart below

Key Point: if you are long commodities stocks, gold, silver, or anything else that is sensitive to a rise in the value of the U.S. dollar I would be VERY cautious.

Dollar Bearish ETF (when it falls dollar rises)

Prechter's Predictions - GREAT VIDEO!!!

Great video from today. This is Robert Prechter, basically the God of the style of investing analysis I use. Enjoy, this is a much watch!!!

Case for Gold outperformance....

Here is a chart showing the relative performance of stock to gold. The chart has broken down out of a bearish rising wedge and looks like a move to the downside is developing. This means that Gold should outperform stocks in the near future......add that to gold's breakout yesterday and you have what looks like a decent long trade in gold

Gold trying to breakout.....this isn't good!!!

GOLD

U.S. Dollar