• Of great long-term significance, gold successfully broke out of a 19 month long base when it had a weekly close at $1048.  Gold now has expected major support between $1033.90 and $978.  Only a weekly close below $970 - which is not expected - would indicate a failed breakout. 

• When gold reached our short-term target of about $1200, we closed our gold and silver futures trading positions.  We keep our long term investment position in gold at all times, but the odds absolutely did not favor maintaining our long trading position when gold was stretched about as far above its 10 week moving average as it normally ever gets.  Given subsequent action, a deeper correction to between $1034 and $978 appeared likely, and gold appears to have bottomed within one percent of our ideal target range.  Silver almost precisely hit the level at which a bottom was most likely to form.

• On February 12th 2010, we stated that gold was positioned in a rare setup that normally only comes along once or twice every 15-20 months.  Notably, silver, crude oil, and the CRB Commodity Index were also in equally rare and compelling setups.  We also said that: "Though there is no guarantee that any one trade will be successful, the odds now greatly favor a strong move up for gold, silver, crude oil, and most commodities."  All appear to have put in place significant lows, and we do not expect to see gold back near $1045 or crude oil near $70 again any time soon (quite possibly never).  On April 30th 2010, gold broke out from a cup and handle formation that projects a move up to near $1300 (or higher).

• We are currently long gold and crude oil futures, GDXJ (junior gold miners), as well as Norwegian Kroner (short USDNOK), while short IYR (real estate trusts) against our long positions.

• U.S. and World equity markets are presumably still in multi-year downtrends.  The S&P validly broke the 300 day (65 week) moving average.  Corrective moves tend to most often top out after retracing between 50 and 62 percent of the previous move (62 percent would be about 1230, and the S&P has now pulled back a fair amount after coming within less than 1 percent of 1230).  We believe a second phase down is likely to begin this year, though it could turn out to be no more than a major correction as long as there is no weekly close below S&P 940.  Likely support areas for the S&P are seen at 1150, 1060, 1000-920, and 800-760. A weekly close below 760 would argue for 666 being the next target.  Nearest major resistance for the S&P is the 1230-1300 range.

• Crude oil broke major resistance at $78 - $80 ($79.86 was the significant high set in 2006) during the first week of 2010, but turned around and cleanly broke back below the same level a mere two weeks later.  Failed breaks of important levels usually lead to significant moves in the direction opposite of the original breakout.  As previously stated: "We got a sharp move in the opposite direction [down to about $70], but now appear to have put in a potentially significant bottom given the deep decline in the stochastic indicator combined with a sharp reversal.  A weekly close at $81 or better will make this highly probable."  As anticipated, we got that weekly close, and odds are that oil will work its way up to test $100 during 2010.

• The $CRB Index broke major resistance at the 284-285 level (the 1983 and 1984 major highs and 2007 significant low) during the first week of 2010, but turned around and cleanly broke back below the same level a mere two weeks later.  Failed breaks of important levels usually lead to significant moves in the direction opposite of the original breakout.  We got a sharp move in the opposite direction, but now appear to have put in a potentially significant bottom given the deep decline in the stochastic indicator combined with a sharp reversal.  We could well be on the verge of another break through the 284-285 level.  If this happens, that break would be more likely to hold.

• For a long time, we expected major support for the U.S. Dollar Index around 74, and the dollar turned up almost precisely from that crucial level.  For months, we have stated that  "A top could be seen anywhere up to approximately 82, and only a weekly close near 83 or better would make us expect a much larger, longer-lasting rally to unfold."  The Dollar Index has pushed a bit above 82 intraweek, but has so far not managed a single weekly close above 82.  Meanwhile, gold has gradually risen even in terms of U.S. dollars alongside the rise in the Dollar Index - something we several months ago mentioned as a plausible scenario.  Gold has set fresh record highs in terms of most currencies, and it is likely to soon do the same in terms of U.S. dollars, perhaps after an initial pullback from near the $1227.50 record high set on December 3rd 2009.

• Long-term U.S. Treasury Bonds have been declining toward critical support between 114 and 112.  If 112 breaks on a weekly close, significantly lower prices (and higher interest rates) are likely on the way for the next several years.  For the secular uptrend in bond prices (downtrend in interest rates) to remain in force, a bottom needs form near present levels.  So either the long bond breaks down in the next few months and long-term rates go significantly higher (and, as a result, mortgage rates too), or we get at least temporary relief with bonds rallying back toward resistance and long-term rates falling.  Given the amount of borrowing the Federal Government is planning to do over the next several years, odds appear to strongly favor the scenario of a major breakdown in bond prices this year (with a corresponding rise in interest rates).

• Follow Normann Financial for clear and concise chart and market analysis, as well as updates on whether the Federal Reserve and the other central banks of the world are failing or succeeding in destroying the purchasing power of the U.S. Dollar, Euro, and other fiat currencies through inflation.  The charts provide far better information than government officials or Wall Street.

We have been looking forward to the launch of the new Van Eck ETF (Exchange Traded Fund) tracking the Market Vectors Junior Goldminers Index for quite a long time:

http://www.4asset-management.net/en/Research/MV/MV/MVGDXJ.html  and  http://www.vaneck.com/index.cfm?cat=3192&cGroup=ETF&tkr=GDXJ

The ticker is GDXJ, and it began trading in November 2009.  We expect GDXJ to vastly outperform GDX in the long run.