Why I think gold has bottomed

[jelly]

I've noticed lately different people have compared the gold market now to 1974, when gold lost nearly 50%.
I decided to do some research and found that the reason why gold lost so much in 1974 was because of central bank selling.

On January 1, 1975, after 42 years, it again became "legal" for individual Americans to own Gold. Anticipating the demand, the U.S. Treasury in particular and many other Central Banks sold large quantities of Gold, taking large paper profits in the process. This had two results. It depressed the price of Gold, which fell to $US 103 in eighteen months. More important by far, it "burned" large numbers of small individual investors.

From: http://www.usagold.com/gildedopinion/buckler2.html I think it was Monty Guild that mentioned this as well in his interview with Chris Waltzek on goldseek.com radio.

So it wasn't because of the stock market rally that gold went down, as people often point to. Rather, central banks were suppressing the price of gold. Fast forward to today, it appears we are on the verge of another stock market rally. If the stock market does rally, this time things should be different simply because central banks are now net BUYERS of gold.

After saying all that, could gold go down some more? Sure, after all we are still in correction/consolidation mode right now. Anything is possible here. But something tells me we won't be seeing $1000 gold again. As others have said, "buy the dips!"
Enjoy the ride, people. We've got some gut wrenching days ahead as well as some awesome days ahead.

[jelly]

Also if you look at the latest Gold COT report from 321gold.com you'll see the commercials have closed many shorts, and added 20,000 long contracts. Often a good sign of a bottom, as the commercials are usually right.

[EO 11110]

mr whipsaw, dennis gartman sold at 1640 ish. THAT was the bottom (after he bought near the recent top)

dude is AMAZING at being on the wrong side

[Goldhedge]

From Sinclair

The Supremacy Of The US Dollar Is Behind Us
March 25, 2012, at 11:23 pm
by Jim Sinclair

Dear CIGAs,

Brazil, Russia, India China and South Africa are meeting next week because of the use of SWIFT as a weapon of war. Expect the formation of a competitive SWIFT system in three blocks. The dollar will test .7200 USDX and fail on the third tap.

There will be an audio interview on this development with Erik King of King World News tomorrow morning.

I have been doubted on many things, much of which has come to fruition. There was a time when $1650 in gold was considered the ludicrous dream of a madman.

2012 is the year that the US dollar will suffer from a significant drop in utilization as the international settlement currency. The utilization of the SWIFT system as a means of making war is the singular greatest mistake dollar managers have ever made.

Phil, that might have seemed logical to you, but you fail to focus on the consequences now in motion soon to isolate the dollar in a three currency block (Yuan/Euro/Dollar) losing at least 1/2 of its previous strength from the international settlement mechanism provided. It is too late now to rethink the use of the SWIFT system as a weapon of war. The cat is out of the bag and the damage is done.

As a product of acceleration of this process, the US dollar will test .7200 on the outdated USDX. The test will fail on the third tap.

Brics’ move to unseat US dollar as trade currency
2012-03-25 10:00
Thandeka Gqubule and Andile Ntingi

South Africa will this week take some initial steps to unseat the US dollar as the preferred worldwide currency for trade and investment in emerging economies.

Thus, the nation is expected to become party to endorsing the Chinese currency, the renminbi, as the currency of trade in emerging markets.

This means getting a renminbi-denominated bank account, in addition to a dollar account, could be an advantage for African businesses that seek to do business in the emerging markets.

The move is set to challenge the supremacy of the US dollar. This, experts say, is the latest salvo in the greatest worldwide currency war since the 1930s.

In the 30s, several nations competitively devalued their currencies to give their domestic economies an advantage over others.

And this led to a worldwide decline in overall trade volumes at the time.

The north will be pitted against the entire south in a historic competitive currency battle – whose terrain has moved to the Indian capital New Dehli – where the Brics (Brazil, Russia, India China and South Africa) nations will assemble next week.

China seeks to find new markets for its currency and to lobby to internationalise it throughout the Brics states.

http://www.citypress.co.za/Business/...rency-20120324

[EO 11110]

gold priced in dollars is retarded

it ought to be priced in a basket of goods

[jelly]

An excellent read on 321gold.com today:
http://www.321gold.com/editorials/sa...lle032812.html

After silver completes a parabolic rise that results in a weekly RSI of more than 80 and a Market Vane bullish percentage in the 90s (ideally, 95 or more), the correction low is typically put in place within 8 months of the peak but the overall correction tends to last a minimum of 15 months.

In other words, economic trends, or at least the general perception of the economy's trend, could push the starting points of the next major advances in the prices of gold, silver and the associated equities out to at least the final quarter of this year. In the interim there would be tradable rallies, but these rallies would end prematurely.

Summary of the article: We have likely already seen the bottom, but we should still be in correction/consolidation mode for several more months.

Traders should be playing the action here, while buy-and-hold people should be accumulating on the dips.