Crude Oil vs Gold

I can see that the selling down in commodities got a lot of readers extremely jittered. I will respond to all the critics here once and for all. This will probably be one of my last posts before we make our way to France for our yearly holiday, just like last year when we predicted the present US recession before holidaying in China.

Note #1: We are still within an inflationary recession. The USD has a rally, but is a bear market rally. It is NOT in the interest of the US to have a strong dollar. Paulson's “Strong Dollar” policy is a joke. The US needs to DEBASE its currency to get out of the mess it created.

Note #2: Gold is one of the few positions that we took and can't be bothered to trade the volatility at all. We took our position around 87X, and we didn't trade it at all along its way to 98X weeks ago. Why? Because we knew we will be trading against the central banks cartel if we did and it will mean we will have to keep our eyes on our tick charts all the time. That's not how we wish to spend our time. The secular trend is up, buy it cheap when the herds are panic selling.

Note #3: Crude Oil broke out of its 100 psychological level before making its roaring surge to 14X (see figure above). That roaring surge was what happened after a pullback re-action. The pullback in Gold right now is a similar re-action following the breakout of 850. Once this re-action is completed, Gold will enter its next roaring surge. Panic selling Gold now is like selling Crude Oil at 95 before its roaring surge to 14X.

Note #4: Different analysts will always have different views on things, because (1) they don't know what they are talking about; and (2) they focus on the wrong time frame. The most important time frame for Gold is the multi-year chart (see figure above).

Note #5: Natural Gas and Crude Oil are traded down. We are looking to add to our position in Natural Gas and will publish more details when we think we understand more of it. Once this correction is completed and months down the line, I believe many will ask why didn't they sell their farms to buy these precious energy commodities when they were cheap!