Gold 2/17/2006

The recent slide in gold seems to have held its upward trend. The yellow trend lines in the chart above suggest that Gold still is in a bullish rally and might go higher. Great consumer spending numbers out the other day led the markets higher, yet today's PPI number (the calculation of how producers in the country decide to sell their goods, primarily due to their costs to make the goods) suggests that inflation is still a concern. Take a look at my updated chart of the 2/10 year yield curve inversion rate and you can see that the inversion in 2000 resulted in a major S&P 500 index decline. This happened before the 9/11 attacks and terrorism issues which affected the markets. As of late December 2005, another inversion has taken place which can produce a similar effect. Another issue is that we have yet to see this market put in big gains to the upside. While we have solid gains in the major averages, resistance might stall a rally. As the markets are off on Monday, we have a long weekend to see how geopolitical issues will pan out (mainly the situation in Nigeria) for the markets.  ¶ 4:13:00 PM