Buy more silver on weakness.

On 7 February 10, I mentioned that "Silver is a real asset, with real value, just like gold, as its supply is finite.  Fiat currencies, on the other hand, do not have any intrinsic value and more could be produced at will.  So, we expect silver to at least keep pace with inflation and in an inflationary environment, an investment in silver should protect our wealth from being eroded."

In that blog post, I mentioned that my research showed that silver was very undervalued and was trading at the higher end of the Gold:Silver ratio since 1980.

At that time, silver was US$15.15/oz while gold was US$ 1,052.20/oz.  It was just reported by Bloomberg today that "Gold for December delivery was 0.2 percent higher after reaching US$1,299.70 an ounce on the Comex in New York. Silver for immediate delivery in London climbed as much as 1.2 percent to US$21.3875 an ounce, the highest price since October 1980." Read article here.

Silver has gone from US$15.15 to US$21.38 an oz.  This is a gain of 41% in slightly more than 7 months.  Gold has gone from US$1,052.20 to US$1,299.70 an ounce.  This is a gain of 23.5% in the same period.  An investment in either one of these precious metals would have been very rewarding but silver has obviously outperformed gold by a large margin.

I am glad I bought some silver and I would like to buy more silver on weakness when the opportunity presents itself as I continue to believe that having some investment in precious metals is an essential part of anyone's portfolio. Silver is a laggard in the realm of precious metals and it is just catching up.

Do I have a target price for silver? Silver reached its peak in value on 15 January 1980 when 1 oz of gold could purchase only 14.9 oz of silver.  Based on today's price of gold at US$1,299.70 an ounce, it would mean US$87.22 an ounce for silver!  Mind boggling, isn't it? That would be 4 times higher than the current price!  Of course, I am not suggesting that silver would hit that price anytime soon, if it does go that high at all. I am merely putting things in perspective. Remember where the price was in February? Good luck.

A new record! Gold prices struck a record $1,300.07 an ounce in afternoon trade on the London Bullion Market as investors sought a safe haven for their money amid increased uncertainty over the global economic outlook. Silver, meanwhile, jumped to $21.44 an ounce . Published: 5:44PM BST 24 Sep 2010 - Read article here.

Related posts:
Gold or silver?
Gold nearing US$1,300 an ounce.

Gold nearing US$1,300 an ounce.

Gold is currently at US$1,293.50 an ounce and silver is at US$21.05 an ounce, even higher than just a week ago when I said "I see immediate support for gold at US$1,260.00 an ounce and immediate support for silver at US$20.20 an ounce.  Gold is now challenging resistance at US$1,270.00 and if it does break this, it could go much higher."

The Fed seems ready to increase liquidity in the US economy and this could possibly cause the US$ to depreciate further. What this might translate into is greater inflationary pressure in the USA in time and I have been a staunch believer of this eventuality as informed by Dr Marc Faber and Mr. Jim Rogers.

The worst thing to invest in would be the US government bonds (treasuries) as bondholders would basically be seeing their wealth eroding away as the US$ depreciates in value.  This is precisely why the Chinese government is so concerned since they are the world's largest holder of US$ debt, after Japan. However, in the short term, they could see bond prices bumping upwards because the Fed would buy bonds to keep interest rates low in an effort to encourage borrowing by the private sector.

Could gold go much higher?  It is my believe that it would but it would not be a straight line up.  The real value of gold is closer to US$2,000 an ounce and this would take time to materialise. So, for anyone who is thinking of having some exposure to the precious metal, it is my opinion that buying on pullbacks as supports are retested would be the way to go.

Related posts:
Gold and Silver highest in the last 12 months.
Real value of gold.

Gold and Silver highest in the last 12 months.

Gold is currently at US$1,267.51 an ounce while silver is currently at US$20.42 an ounce. These prices are higher than in June 2010 when I blogged (again) about how we should hold some gold and silver as a hedge against all other forms of investments and against fiat currencies. What little exposure I have to these two precious metals is turning out rather nicely.

In the short run, I see immediate support for gold at US$1,260.00 an ounce and immediate support for silver at US$20.20 an ounce.  Gold is now challenging resistance at US$1,270.00 and if it does break this, it could go much higher.

On 20 June 2010, I blogged that "if we believe in charting, silver's longer term trend is still up and I would buy more on weakness." That view has not changed.

Related post:
Hedging and precious metals.

Gold hit $1,269.45 on the London Bullion Market on Tuesday afternoon, beating the previous record of $1,265.30 struck on June 21. Read article here.

Addition on 15 Sep 10:
Gold prices under the continuous contract set a new all-time high of $1274.60 per ounce, well above the previous all time high of $1266.50 per ounce. Silver prices continued their ascent as well. Specifically, the December contract for the precious metal hit $20.55 per ounce.

Charts in brief: 21 Jun 10.

Most counters in my watchlist are positive today as the STI gained to close just a whisker off 2,880. It would seem that the Chinese government has done the world a great favour by deciding to let the RMB strengthen. This is something I have believed should happen for some time. A stronger RMB would ameliorate the problem of inflation within China, raise the purchasing power of its people and improve standards of living. Increased domestic consumption would do a lot of good for China's own economy as well as the global economy. You might want to read what I wrote in an earlier post here.

STI +1.6%; More upside on window-dressing, says SIAS
Monday, 21 June 2010

© 2010 - The Edge Singapore

AIMS AMP Capital Industrial REIT: Volume expanded today and all trades were done at only one price, 22c. MACD has turned up.  MACD histogram has a buy signal. MFI has turned up, forming a higher low. OBV has turned up, suggesting increased accumulation.

CapitaMalls Asia: Price broke the resistance band of $2.19 to $2.21 which I identified earlier. Closing at $2.22 seems bullish but volume suggests that this might not be durable. This counter is probably rising due to a lack of sellers rather than an abundance of buyers. Nonetheless, the momentum is still good as suggested by the MFI and price might be pushed higher.

Courage Marine: The picture is somewhat similar to CapitaMalls Asia.  A white candle day on improved volume but not impressively so which suggests a lack of sellers rather than an abundance of buyers. MFI shows improving momentum while the OBV has turned up slightly.  It remains to be seen if resistance at 20c could be taken out. A significant resistance after 20c is at 21c.

FSL Trust: MFI and OBV continue to rise. Could 40c be taken out this week? The next resistance level which is likely to be a strong one as suggested by candlesticks and a declining 20dMA is at 42c.

Golden Agriculture: Price continues to be resisted at 55c although it touched a high of 55.5c today. Momentum is still positive and MACD is about to cross into positive territory. Volume is, however, unimpressive which probably resulted in the failure to take out 55c and instead formed a white spinning top which is a possible reversal signal.  Support is at 51.5c in case of a trend reversal.

LMIR: It seems that the merged 100d and 200d MAs are too strong to be taken out today. Price closed at 47.5c which is where we find the 50dMA, forming an inverted cross in the process. The negative divergence between price and volume continues to suggest LMIR has been rising on weak technicals. If the 50dMA does not hold up as support, the next support is at 46c as provided by the 20dMA.

Related posts:
AIMS AMP Capital Industrial REIT: Big boys.
Courage Marine: Triple bottom?
Golden Agriculture: Resistance remains at 55c.
LMIR: Testing resistance.
FSL Trust: Verona I.

Hedging and precious metals.

I have always liked hedging. Why? Because there are very few absolutes in this world. Anything is possible and we can only work on probabilities.  So, plans which do not take into consideration how things might go awry are not sound ones. Even with hedging and contingency plans in place, we might still end up with the shorter end of the stick sometimes. Well, the Chinese has a saying: "Humans plan but the Heavens fulfill."  Sometimes, things do go wrong.  Do what we can to reduce risks but we cannot eliminate risks.

My greatest losses in investments usually resulted from not taking enough precautionary measures to reduce risks. Sometimes, I just threw caution to the wind and went with my heart and, in most such instances, ended up with a broken heart and a thinner wallet. Actually, the pain from such experiences is good in a perverse way because I would then go back to basics and become very cautious again. This is what being human is about, perhaps.

Gold has hit a new record high of US$ 1,258 an ounce.  I have talked about buying physical gold as a hedge against all other forms of investments and against fiat currencies for some time now.  However, with gold's price rising higher and higher, silver is looking more and more attractive.

On 7 February, I blogged about how silver offered more value than gold. I said "Silver is currently trading at the higher end of the Gold:Silver ratio since 1980. Silver is now US$15.15/oz while gold is US$ 1,052.20/oz. This gives us a ratio of 69.45 to 1. This is closer to the historical high of 99.8 to 1. So, there seems to be some truth in the claim that silver is undervalued now and that it is a laggard in the realm of precious metals or it could also mean that gold is simply too expensive. Some hedging might not be a bad idea."

At that time, a reader mentioned that it might be better to wait for US$12 to US$13 an ounce before accumulating silver and my reply was "Yes, I saw the head and shoulders pattern and the neckline broken. There is support at US$15. This, however, was violated recently as price dipped below US$15 for a while but recovered. I see support at US$14 as well. US$12-13? Possible, of course.

 "But with limited downside compared to the potential upside, I prefer to average in slowly. After all, TA shows where the supports are but it does not mean that the supports will be hit. I will buy some at current price level and if it weakens, I will accumulate. I believe in hedging."
 
Anyone who went ahead and started a Silver Savings Account with UOB back in February then would be in the money today. 

Now, with gold at US$ 1,258 an ounce and silver at US$ 19.17 an ounce, one ounce of gold would buy you 65.62 ounces of silver.  Compared to 7 February when one ounce of gold could have bought you 69.45 ounces of silver, the rate at which the price of silver is rising since then is faster than gold's.  If we believe in charting, silver's longer term trend is still up and I would buy more on weakness.

Related post:
Gold at US$1,210 an ounce.

Charts in brief: 4 Jun 10.

FSL Trust: Bought some units at 45.5c today.  Volume shrank as price closed at 46c.  46c is still the resistance to watch. A semblance of stability has returned to this counter but its price is probably not going to rise in a hurry. MACD continues to rise above the signal line and MFI is testing 50% once more.

LMIR: Price closed at 47c above the 20dMA on low volume. We need confirmation that the 20dMA is resistance turned support. 47c is a many times tested support and should provide resistance.  I have sold some units at 47c to reduce my exposure. Next resistance level is at 48c which approximates the positions of the 50dMA and the 200dMA. The downtrend is still intact.

AIMS AMP Capital Industrial REIT: 22.5c. Very low volume. MACD has crossed into positive territory and MFI continues to rise above 50%. OBV has flattened at a high. I continue to queue to sell some at 23c, the top of the range.

Golden Agriculture: A doji formed today on very low volume. The downtrend is intact even as the MACD forms a bullish crossover with the signal line in negative territory. A lower high in the MFI tells of weak positive buying momentum. I have sold into strength and will wait for clearer signs of bottoming before going long again.

SPH: Volume continues to fall as price formed a white spinning top today, resisted by the 20dMA at $3.79. OBV is flat. MFI is moving to test 50%. The negative divergence between rising price and falling volume is quite clear to see (as with many other counters). I would like to to sell some SPH shares at $3.83 but without volume, it seems difficult.

Related post:
Charts in brief: 3 Jun 10.

Gold is higher once more.

Gold hits record high in Asian trade
Posted: 12 May 2010 1113 hrs

HONG KONG : Gold opened at a record high of 1,228.00-1,229.00 US dollars an ounce in Hong Kong on Wednesday, as investors sought a safe-haven over deepening concerns about the eurozone debt crisis.

The precious metal closed in Asia on Tuesday at 1,208.00-1,209.00 dollars but later climbed as high as 1,224.82 dollars an ounce in European trade.

Analysts said the commodity was likely to maintain its safe haven role while other markets remained vulnerable.

The previous record for the metal was set on December 3 last year when it reached 1,226.56 dollars.

"The response of the central banks and the IMF to the southern European mess is almost guaranteed to ensure continued volatility in world markets," said Capital Spreads analyst Simon Denham.

Investors had on Monday welcomed the European Union and International Monetary Fund aid package worth 750 billion euros (one trillion dollars) to resolve the debt and budget deficit crisis in Europe.

However, the euphoria faded on Tuesday amid resurgent doubts over countries' ability to reduce their deficits.

Read complete article here.

Gold Surges: Time to Climb on Board or Is the Party Just About Over?
Posted May 12, 2010 03:06pm EDT by Heesun Wee



Related post:
Gold at US$1,210 an ounce.

Gold at US$1,210 an ounce.

I started buying gold bullion coins in March/April 2009, believing that it is a hard currency that has intrinsic value unlike fiat currencies which are flawed.  Jim Rogers and Marc Faber have greatly influenced the way I look at current day world economics and I take their views to heart.

When I started this blog last Christmas Eve, one of my first posts was on the subject of gold. The last time I bought some gold bullion coins was in March this year and I gave one to my dad for his birthday and I just gave one to my mom for Mothers' Day. Last year, I gave each member of my family a gold coin as well and the value of those coins have gone up quite a bit by now.

I strongly believe that we need some hard currencies as a hedge against fiat currencies and inflationary pressures. Physical gold is the most accessible precious metal in Singapore at a "fair" price. There are issues but it's a lot better than the situation with physical silver, for example.

I continue to believe that every person should have some physical gold as a long term hedge against all other forms of investments and cash. This could be gold jewelry as well for people who do not like the idea of buying gold coins just for keeps, but, of course, we would be paying for workmanship and wastage in such instances. Some would buy gold coins with commemorative messages and we would be paying a higher price for numismatic value in such instances.  For me, I still prefer the boring 1oz Canadian Maple Leaf as I buy gold for its intrinsic value.

Gold closed at US$1,210 an ounce on Friday. Translated, to buy a 1oz gold bullion coin at UOB now, we would have to pay about S$1,880.  This compared to when I first started buying last year at about S$1,400 an ounce, the numbers speak for themselves. Check gold and silver prices at UOB.

Of course, gold price will not move up in a straight line.  Prices almost never do.  I would look out for dips and corrections to buy more gold.

I will also be looking out for opportunities to increase my exposure to silver as I believe that it is undervalued when compared to gold.

Related posts:
Gold: to buy or not to buy?
Gold or silver?

Two great minds on Greece and gold.

I found these clips of recent separate interviews with Marc Faber and Jim Rogers as they shared their views on Greece and gold.  Make good sense, as usual.

5 March 2010
Marc Faber on CNBC - Greece and gold.



26 March 2010
Jim Rogers on CNBC - Greece and gold.





Related posts:
Gold as an insurance against inflation.
Gold or silver.
Real value of gold.

Gold or silver?

I have blogged about gold and how it might be a good idea to buy some to protect our wealth against a backdrop of higher inflation.  For almost a year now, I have been hearing from various quarters that silver is undervalued and from a value perspective, it is a better buy than gold.  Certainly, Marc Faber and Jim Rogers, two of the greatest financial brains of our time seem to think so.  This is not a new idea but it is to me since I have not seriously looked into this before.

Silver is a real asset, with real value, just like gold, as its supply is finite.  Fiat currencies, on the other hand, do not have any intrinsic value and more could be produced at will.  So, we expect silver to at least keep pace with inflation and in an inflationary environment, an investment in silver should protect our wealth from being eroded.

So, I decided that I should do some research on the subject even though I am quite comfortable with my current choices in investments.  If I decide not to buy any silver in the end, I would have gained some useful knowledge anyway, I rationalised.  I found much information and I am now posting what I feel are some interesting findings.

From MoneyWeek, 24 April 09:

Indeed, well over half of the annual silver supply is now used by industry (in sectors ranging from medicine to aerospace), compared to around 11% for gold. In precious metal upswings, it tends to outperform gold: the "same drivers as gold driving a smaller market ensures that", says Franklin Sanders of The Money Changer.......

.....Once sentiment turns, however, silver can tumble rapidly...

From Mineweb, 5 Nov 09:

The longer term trend channel for silver began on March 21st, 2003 at a low of $4.35 and has upper resistance of $51 and lower support at $12. Such volatility has always been very high because, with the silver market only about 2% that of gold, even a small amount of money flowing into silver has a huge impact.


The medium term trend channel began with a lengthy March through August 2007 consolidation base of $13 - $14 and currently has upper resistance at $32 and lower support at $13.


The Gold:Silver ratio has ranged from 14.9-to-1 in January 15, 1980 at the time of the record high gold and silver prices to 99.8-to-1 on February 22, 1991 when the price of silver was particularly depressed.


The current short term trend channel began in November 2008 at $8.79 and currently has upper resistance at $22 and lower support at $15.50.

Silver is currently trading at the higher end of the Gold:Silver ratio since 1980.  Silver is now US$15.15/oz while gold is US$ 1,052.20/oz.  This gives us a ratio of 69.45 to 1.  This is closer to the historical high of 99.8 to 1.
So, there seems to be some truth in the claim that silver is undervalued now and that it is a laggard in the realm of precious metals or it could also mean that gold is simply too expensive.  Some hedging might not be a bad idea.

There is a very easy way to gain exposure to silver in Singapore through a Silver Savings Account with UOB.  I might just start an account.  Just like gold, I will probably be buying silver with an aim to protect my wealth with the increased likelihood of higher inflation in the coming years.  It will not be for trading.

Related posts:
Gold as an insurance against inflation.
101 investment choices.

A new year and a new decade. Strategy for 2010.

Firstly, Happy New Year! It's the beginning of a new year and a new decade. Many countries in the world still have huge debts to deal with but let's hope things will be better the next 10 years.

This is extracted from the latest issue of NEWSWEEK magazine:

The American goverment may owe China US$799 billion but when it comes to foreign debt per capita, the US is relatively prudent. Which nationality has the highest foreign debt per capita?

Greeks US$ 27,746
Belgians US$ 27,023
Austrians US$ 26,502
Irish US$ 24,247
Norwegians US$ 21,402
Italians US$ 21,089
Dutch US$ 20,412
French US$ 18,946
Germans US$ 15,574
Finns US$ 13,617
Americans US$ 11,094
Danes US$ 9,410
Spaniards US$ 8,715
Swedes US$ 7,058
Brits US$ 6,526

Now, this puts things in perspective. Many countries are still not out of the woods. This gives the idea that we will see the global economy going into a tailspin again in the next 2 or 3 years greater credence. We are experiencing a cyclical bull in a secular bear market and not the beginnings of a secular bull market.

My strategy for 2010?

1. Gold
I am keeping an eye on the price of gold. If it goes closer to the psychologically important support level of US$1,000 an ounce, I will buy more physical gold as a long term hedge against inflation. Gold also acts as an insurance for my other investments. I buy physical gold from UOB.

2. Crude oil
I believe that demand for crude oil will continue to strengthen through 2010. However, it will not go up in a straight line. It will climb a wall of worries and we will have plenty of worries in 2010, no doubt. I would trade counters which are leveraged to the price of crude palm oil (CPO) as a proxy to the price movement of crude oil. I like Golden Agriculture.

3. Japan
As a contrarian play, Japan might outperform after almost two decades being in the doldrums. I like the Japanese Yen. I like Japanese real estate. I like Saizen REIT.

4. Indonesia
A strong emerging market, Indonesia did not suffer negative growth in 2009. I like LMIR and First REIT for the low gearings and the high yields.

5. Healthcare
There is greater demand for quality healthcare with increasing affluence and an ageing population in Singapore. I choose Healthway Medical.

6. Tourism
2010 will be a year where tourist arrivals balloon in Singapore with the completion of the two integrated resorts (IRs). Looking for value and high yield, I like Suntec REIT and SPH.

There are many other counters which will do well in 2010 but I will concentrate on these I've highlighted. The choices here are based on FA. Remember to use TA to identify entry and exit prices. Good luck in 2010.

Real estate as a hedge against inflation

For the last year or more, I kept hearing and reading the word "deleveraging". Companies and individuals are all busy deleveraging. So, basically, people are saving more money, paying off their debts and spending less. Overall, it gives an impression that leveraging is undesirable and should be done away with.

Marc Faber famously said that, in Asia, the family run businesses in Hong Kong and Singapore have very little debt. Many rich families in Singapore don't have any mortgages. He thinks that Asian real estate will continue to do well. This gels with what Jim Rogers thinks about how we should own some real estate and he, in a recent interview in New York, actually said that he would buy some US real estate now if he were staying there.

In my posts on the subject of gold, I mentioned that I buy gold as a hedge against inflation and that I do not trade gold. We could also buy other tangible assets which would keep pace with or grow faster than inflation and protect or grow our wealth in the process. However, most of us are not in the same league as Marc Faber or the rich families he mentioned.

So, what are we to do if we want a piece of the action and own some Asian real estate? Do we work very hard to save money before we buy that piece of real estate? 100% cash upfront and without a housing loan? Or do we put down 20% and borrow 80%?

Quite simply, like any other investment, the answer lies in timing. Buy when the market is depressed or just turning up and hold for the long term. If you believe that the world is going to see extraordinary inflation in future, this is one thing we should do if we have the means. If we have the money, pay 100% cash upfront. If we only have 20% to <100% of the value, take a housing loan for the balance. As an example, I bought private real estate 6 years ago and took a loan for 80% of the price. The valuation is now 80% higher. If I were to rent it out, I would realise a yield of 7% p.a. This is much higher than the interest rate on the bank loan I'm servicing. Capital appreciation plus steady passive income. Sounds like a high yield stock? Sure does. Having said this, we have to keep an eye on the interest rates. If that goes up significantly and we do not have the means to pare down the outstanding loan amount drastically, it might be time to let go. If I had told myself 6 years ago that I should work harder and save more money before taking the plunge, I would have worked harder, saved more money but ended up poorer. The next time the property market has a correction in price, bear this in mind and take the plunge, if you have not done so already. Inflation is a powerful force. If we have the means, we must do all we can to protect ourselves against it. Buy Japanese real estate

Gold as an insurance against inflation

Why buy gold? For me, gold is just another form of insurance against inflation. Real assets such as crude oil, Asian real estate and commodities are also used to hedge against inflation.

Gold will hit US$2.5k eventually and, probably, go higher in the years to come. The current inflation adjusted value of gold compared to the high achieved in 1980 should be about US$2.4k now. We are about halfway there. If we believe that inflation is going to be a big issue in the coming years, it's a no brainer that gold is on a long term uptrend. Real value of gold

However, I'm not overzealous about gold because I am not living in the USA or HK, making US$ or HK$. I am living in Singapore and making S$ which will appreciate against US$ and HK$ in time. This makes gold investment less compelling for me.

Frankly, I still prefer trading in the stockmarket and buying undervalued and/or strong dividend paying stocks for now. My gains in the stockmarket so far this year have outperformed gold or silver. Cashflow is also something I get from my stockmarket investments that I do not get from gold. However, all parties will come to an end. Will have to know when to exit the stockmarket.

101 investment choices

There are so many things we can invest in these days. Basically, it's a whole gamut of stuff including stuff like wines, art, watches, jewelry and antiques. Heck, I collected comics when I was in school because a friend of mine told me how they could appreciate in value over time! The comics are probably still mouldering away at home.

For the average person, there is no need to be knowledgeable in all or even most forms of investments and there is definitely no need to diversify into 101 areas in investment. I am quite contented to have the following:

1. Bank deposits
2. CPF
3. SRS
4. Foreign currencies (RMB and IDR)
5. Gold buillion coins
6. Single Premium Endowment Policies
7. Regular Premium Endowment Policies
8. Regular Premium Life Policies
9. Unit trusts
10. Equities (High yielding types mostly.)
11. Real Estate

I am able to manage these on my own and, in aggregate, if they outperform the returns from fixed deposits and outpace inflation, I'm happy. To me, investment is not a complicated matter. It's quite simple.

Keep things simple. Don't complicate things for ourselves. Land banking? Wine? I don't need these. There are many money making opportunities with the tools I have now. That's enough for me.

Real value of gold

To look at gold as a hedge against inflation, we have to look at the real value of gold over time. For example, if someone bought gold at the peak in 1980, he would still have lost money after taking inflation into consideration today.

If someone had bought gold in 1914, he would have gained about 200% in the course of the last century after taking inflation into consideration. It is not an amazing return.

Everything must be put in context. I am a buyer of gold today but I will be a seller of gold one day, I'm quite sure.

With US government printing money and with almost 0% interest rate, inflation is likely to become a serious problem in future. As mentioned by Jim Rogers many times over, gold will probably see US$2,000 an ounce again.

The following chart is taken from an article on inflation adjusted value of gold by Barry Ritholtz - October 7th, 2009, 11:30AM:

Gold: to buy or not to buy?

Technically, gold was overdue for a correction and the charts show it. Technically, the US$ was due for a rebound as it's oversold and short covering must take place at some point. The market just needed an excuse.

Fundamentally, gold is an asset and still a hedge against inflation as the US$ will continue its long term slide due to oversupply, this is after a brief rebound (which could last up to several months).

At this moment, we can only identify price levels which are strong supports and see if they hold or break. Currently, the next band of strong support is US$1,020 to US$1,040. If that breaks, it would be US$990 to US$1,000. We want to see price bouncing of a support and closing convincingly above it. It needs to be confirmed in the following sessions, hopefully forming higher lows and higher highs till the next resistance level is broken.

If gold does go below US$990, it might be a whipsaw as I feel that US$990 is a level that should hold as it is a level that was a many times tested resistance and should be a strong support. If US$990 breaks convincingly, gold would be headed much lower. It would spell the end of the uptrend for gold, for quite a while at least.

However, the longer term trend of gold is up and the longer term trend of the US$ is down. I do not doubt that.