Gold Preparing to Challenge the Highs?

The euro continued to take heat today with a downgrade in Portuguese and Greek debt to junk.  As the New York trading day began, gold was lower with a moderately lower stock market.  As time progressed, the euro went to new lows, gold (in US dollar terms) had a massive breakout, and the US stock markets took a serious beating.  As the day progressed, the large and mid cap gold miners recovered and went positive.

We have been waiting for a turn for a few days and expected a bit of weakness that should have ended today and prompted a buy signal.  However, today's move up in gold along with dollar strength implies that both significant short covering and Europeans fleeing to gold for safety is occurring.  In light of the US dollar's strength, gold should have been down to flat in dollar terms.

It's too early to say whether or not we've seen a new trend in decoupling whereby everyone is beginning to move to gold instead of paper currencies.  However, given today's action, we may be seeing the beginning of the real show in the gold market.

At this stage we're buying any weakness or a confirmed breakout above 1175 (which may occur tomorrow).  There are a substantial number of bullish, almost ready to break out patterns in many junior gold miners.  Since the HUI broke out today, we may see the juniors follow soon.

Get on the bus.  It's leaving.
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