General Observations / 'Potential' Insights

By: Ed Bugos | Tue, Jun 20, 2006
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Federal Reserve Policy (superficially hawkish):

Other Fundamentals & Noteworthy Facts (structure of gold market sound, global money supply trends bullish):

Technicals (burden of proof shifts to gold bulls - intermediate trends broken or at critical inflection point):


Our outlook on Federal Reserve policy (i.e. skepticism) suggests that the correction in gold described by an abandoning of the inflation trade was a mistake. Gold's valuation dynamics (relative to the main inflation reality as well as the other commodities) suggests that it was premature. A correction was inevitable and the hawkish overtones came at just the time that momentum was breaking, causing damage to the bullish intermediate trends. If our outlook and hypothesis is correct, recovery should be relatively fast, beyond the token turbulence surrounding the June 29th FOMC. I believe that the market has overestimated the Fed's resolve but may nevertheless need to see a concrete sign of its absence.

I still think the worst of this correction is behind us but I'm not sure whether we've seen the correction lows yet.

Certainly, at any rate, now is a better time for new comers to jump on board this bull market than it was during March or April. However, my intermediate outlook remains on guard subject to a test of the Fed's resolve, the development and recovery of gold sector trends, and the situation in currencies following the appointment of a new US Treasury Secretary.



Ed Bugos

Author: Ed Bugos

Edmond J. Bugos

Ed Bugos is a former stockbroker, founder of, one of the original contributing editors to and former editor of the Gold & Options Trader. He continues to publish commentary on market and economic trends; and provides gold, economic and mining research to private clients worldwide.

The editor is not a registered advisory and does not give investment advice. Our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity or any other financial instrument at any time. While we believe our statements to be true, they always depend on the reliability of our own credible sources. We recommend that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that, we encourage you confirm the facts on your own before making important investment commitments.

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