Gold price breakout on a 'mini' crisis 2009 (update4) - 'mini' crisis is now here.

Some contrarian investors have indicated that gold is now over bought and that a correction is due. This correction would be the start of a risk averse environment for equities hence stocks being sold and gains in the US Dollar would then drive gold lower. This is true to an extent, as gold is a hedge against a weak USD and gold corrects when the USD strengthens, but gold now is becoming increasingly a 'crisis' hedge; in the sense that the USD can no longer been sustained as a risk averse asset, meaning the USD is now a very unstable investment.

So gold is now a heavily supported asset, central banks and goverment are trying to diversify into gold as the USD weakens further. With the Federal Reserve and US goverment obsessed about weakening the USD with continued money printing thus flooding the US economy with liquidity, as mentioned the stability of the USD is being questioned short term, near term and of course long term. The 'mini crisis that is now occurring is the anticipated commercial property market meltdown as discussed in Dubai World CDS spreads blow apart, the Dubai commercial market appears to be the epicenter at this point. As the property developer Dubai World is the first to shatter markets with debt defaults looming. This should ensure that all debt and interbank spreads from CDS (credit default swaps) through to the LIBOR rates will now widen. With banks revisiting the fear of the 2007/2008, think back to the subprime residential meltdown in the US with caused banks to write down assets in the trillions and froze credit markets; so the beginnings of another credit crunch have now occured and this could be a lot bigger in the size of losses. With the US markets on holiday (Thanks giving) Europe bore the brunt of a wave of selling, the USD strengthen then weakened and gold was bought on as a safe haven.

Optimal Tracker Filter trailing with gold price with little diversion. Gold is just under the upper Bollinger Bands set at 20, 2 days. Gold is now way above the moving averages of 50 and 100 days, this could indicate an overbought signal, however the price support for gold is still 1028 with a trigger sell at 990.

Finally the ATR is still showing low volatility with the gold price, which would mean there has been a steady buying of gold with little profit taking. This would reinforce that the flow of money going into gold is for protection as gold is seen as a safe haven or 'crisis' hedge, more so over the USD and other related assets.

*morbius glass doesn't give investment advice, trade at your own risk