For the 1st time in years, everything is in place for a major bullmarket phase to get underway in gold and silver. There are two big reasons for this. One is that the dollar is looking set to drop – and has started to already. The other reason, which is of course related, is that those in power look set to attempt to loosen the intensifying deflationary stranglehold on the world economy by unleashing a global QE blitz that could dwarf anything that has come before, and will end in hyperinflation. Egon Von Greyerz talks about this in an article on King World News entitled Legend Warns Global Panic Is Coming. Don't be put off by the lurid, blood-curdling presentation – I believe that what Von Greyerz writes makes perfect sense, and his gold bullion service outside of the banking system sounds like an attractive option – remember that "What's yours is theirs", so if it is inside the banking system they will simply appropriate (steal) it, if it suits them, when the time is right. Note that I have no association with Von Greyerz or KWN and no incentive for mentioning all this.

Now I want to point out that everything has unfolded pretty much exactly as set out in the article Imminent Dollar Shock and Effect on Gold, Silver & Oil that was posted on www.clivemaund.com on 18th January. This was a subscriber only article and some subscribers did very well after buying things like NUGT.

Now we proceed to look at the latest charts. On the 6-month gold chart we see that it has made good gains over the past couple of weeks, and the big question to address here is whether it is going to get whacked back down again, as has always happened up to now in the recent past, every time it has poked its head out above the parapet. Considering how hard the dollar has dropped over the past couple of days, the rise is not very impressive, and since it has risen up through a still falling 200-day moving average to a point way above its 50-day to arrive at a resistance level at the upper boundary of the major downtrend channel shown on its 5-year chart below, the chances of a pullback soon are considered to be high. However, don't forget the mounting bullish factors described above that are starting to come into play. If may not drop back far, if at all, and it could surprise by breaking out of the downtrend channel, which would trigger a much more dramatic rally.