-->The COMEX has raised margin requirements for gold contracts to 50 percent. I've seen such action kill other commodities. So far, it does not seem to have affected gold. That could be that a lot of the gold buying goes directly into bullion coins or into CEF or GLD. Of course, gold is very international and buyers on the gold exchanges in Dubai or China don't give a damn what the Comex does. When an item wants to go up, it's going to go up regardless of a regulator's actions.
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I want to talk a bit about gold. I read the newspapers and the various comments about gold every day, and most are talking about gold rising on the basis of inflation. Few are talking about the real reason for gold's rise -- a move (not yet a flight) out of fiat junk currencies. You see, that's the thesis that nobody wants to deal with -- the fact that fiat paper money is"garbage money," money that can't and won't hold its purchasing power.

So gold isn't rising on the basis of inflation. If the markets were worried about inflation, bonds would be caving in -- and they're not. No, sophisticated investors see the massive amounts of US debt, and they know that ultimately that debt will be monetized. They know that the purchasing power of the dollar is heading into the basement, which is why sophisticated investors are opting for tangible wealth -- gold.

The chart below shows that gold is severely overbought. The extended rising trendline has morphed into a much steeper rising trendline. Those already in gold are wondering how long this overbought advance can continue, and they are wondering when the inevitable correction arrives, how severe it will be. Those who are not in gold are either bad-mouthing it or waiting for the correction to buy, assuming they will buy at all.

In the meantime, gold acts as though it's in a world of its own, ignoring its overbought RSI, ignoring MACD, ignoring the acute angle of its ascent, ignoring everything but the fact that investors all over the world want gold in their portfolios.

The red arrows below tell the overbought story. So should you buy gold or more gold here? Not according to technical analysis. But there are times when technical analysis doesn't work. This may be one of those times.
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Richard Russel's Comment vom 9.12.2005 nach Börsenschluss N.Y.