Traders endevour to estimate tops to calculate when to take...

Traders endevour to estimate tops to calculate when to take profits, just as they try to estimate bottoms to buy. It's an absolutely fundamental and necessary function.

Gold is the most complex of any instrument. However, I have found in layman's terms that the number one competition for value is US interest rates. For example, if you compare US treasuries to gold, you can see that treasuries and low rates have contributed to about 50% of the rise in gold i.e. the money printing effect. Now with the fed announcement yesterday, that's not gonna end any time time soon but it will one day so we should be watching closely. Factors supporting gold presently seem to outweigh bearish sentiment.

• Are interest rates remaining low for the next 24 months? = Very Positive


Other factors


• Safe Haven = Is US debt growing or falling? = Positive


• Gold as a currency = Positive


• Gold demand (India & China) = positive
  


• Growing gold supply? = Negative


• Demand destruction? = Negative

A quote from Market Nuggets sums up the current mood nicely.

“We are very likely to be seeing some profit taking in the coming sessions, which may stimulate some price stagnation or even a slight correction,” MKS says. “However, the outlook for gold remains bullish as ultra-low interest rates continue to keep real interest rates negative.”

Longer-term: Gold stagnated for 20 years from 1980-2000, after a period of scintillating performance. It could happen again, that's all I'm suggesting. Treasury movements will be the key.