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Weldon - This is What Will Move Gold & Silver Higher

With gold trading $20 higher and silver up almost $2, today King World News interviewed Greg Weldon, Head of Weldon Financial. Weldon has a global following of some of the wealthiest investors in the world including individuals, institutions and financial firms. Last time we spoke with Weldon he mentioned that looking at the money supply, the lowest target for gold doesn’t come into play until we see at least $3000. When asked about his take on the resolution in Europe and where gold and silver are headed from here, Weldon stated, “The action here is bullish and it’s hard to refute the buying that is coming in to the metals. We discussed last time the long liquidation of speculators in both gold and silver, even to the degree where there had been some long purchases by commercial accounts, lifting short hedges.”

Greg Weldon continues:

“This move is a result of weakness in the dollar and strength in the euro based on the thought process that Germany has stood its ground on trying to maintain a hard currency for the euro. The thinking here is the ECB will not be monetizing debt as part of this bailout plan.

In gold what looks healthy is the fact that you didn’t even reach the 38% retracement level on the downside move. The decline, while large in dollar terms, did not even take you back to the first of the fibonacci levels relative to the bull move dating back to 2009. To me that is a sign of inherent strength.

Also the fact that gold held some of these critical moving averages, from a technical perspective this is fairly resilient action. Momentum is pretty strong and there is a lot of dry gun powder on the sidelines, so we will most likely see continued upside action. People want to get bullish and that creates a fertile ground here on a near-term basis.

Regarding silver if you recall our last discussion we talked about the fact that silver had already done a lot of the technical work in terms of the low of $26 that we reached in September. You had completed the retracement levels off the highs in a very well defined abc pattern.

Silver was also in sync with the same position dynamic that we saw in gold. In other words speculators had bailed. There is no bloated position situation to hold you back here....

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“You do have some overhead resistance in silver not far from here between $37 and $39, but clearly on the back of this momentum silver has the ability to reach the $40 level short-term.

There are a lot of question marks still surrounding what the ECB is going to do so that is a reason for caution here. What we know is Germany has essentially said, ‘We are capping our commitment at 211 billion euros,’ which is the amount they have already committed. So there is no new commitment from Germany and the ECB is supposedly not going to be monetizing debt.

For a move to new highs we need more information before we can suggest that is what this means today. But taking a look at the bigger picture, the secular picture, what people are not paying attention to is the erosion in the macro-economic fiber throughout the world. BRIC’s, emerging markets, in Asia in particular and in the US, you have had somewhat of a wealth deflation over the last couple of months.

You also had a sharp, accelerated downturn in the economic data that’s very obvious. The next place central planners will be looking is at the macro picture and that could generate some monetary impetus which could be supportive. This also fits in line with our long-term secular picture where it is these bouts of reflation vs bouts of deflation.

In that environment central bankers are always pushing harder on the reflation side. We have already seen a couple of central banks move towards an easier stance and there is anticipation that China will do so as well. They added liquidity the other day which is pretty interesting.

So from that perspective it is a reminder that the secular focus is still on reflation and this monetary dynamic will come into play as quickly as we see a downturn in the macro data and we are seeing that happen now. So that does bode well on a much broader picture for our forecast of gold and silver at significantly higher levels.”

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Eric King

KingWorldNews.com

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