While the banks stocks implode, let's have a look at the pattern developing in spot gold, which is 10 times the price of SPDR Gold Shares ETF (GLD). Spot gold prices pivoted to the upside off of the $800 level, which also coincided with a successful test of the November-January support line ($811) and the rising 50 DMA ($812). The two session rally (+5%) likely initiated a new upleg that should climb at least into the $850 area, and in the event that gold catches a REAL BID as protection against all sorts of implosions in the paper asset and banking worlds, we should not be surprised to see it rocket quickly to $925, and then to $1,000+. Then again, since when did gold ever act intuitively? Actually, between 1976 and 1981, when it acted like a hedge during a period of unabated inflation. In any case, from a near term perspective, higher prices should be forthcoming.



Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his technical chart analysis and trading alerts on all major markets. For more of Mike Paulenoff, sign up for a free 15-Day trial to his MPTrader Diary by clicking here.