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Why I’m Getting Bullish On The Dollar...By Jeff ClarkFriday, September 15, 2006 Gold is the ultimate fake-out artist.
Gold and gold stocks have been stuck in a trading range all summer long. Several times it looked as though the sector was about to break down and give me the lower prices I’ve been expecting to see for the past few months… but buyers stepped up and brought the sector back into its trading range.
Last week, gold and gold stocks broke out of an ascending triangle pattern, which is normally a very strong bullish move. But the sector quickly reversed, and we now have a very ugly looking chart pattern...
 In fact, it now looks like gold stocks are in the throes of a significant decline similar to what we saw back in May and June. We may have a shot at the 265 target for the Gold Bugs Index (HUI) in the near future...
Currently, gold stocks are significantly oversold, so we’ll probably see a short-term bounce develop soon. But I’m confident we’ll see some more downside action in the sector before it’s time to jump in and start buying…
Aggressive investors can consider short selling a few gold stocks on any bounce in the next few weeks - but there’s a better, safer move you can make if you agree with me on a further drop in gold.
To be bullish on gold is to be bearish on the dollar, and vice versa.
In the long run, the dollar is a doomed currency. That is what makes gold such an attractive long-term investment. But in the short term, the dollar looks really, REALLY good. And that may, in fact, be what the price of gold is telling us.
If you’re looking for a trade in the gold market, consider betting against it… which means getting bullish on the dollar.
Best Regards & Good Trading,
Jeff Clark
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