$1,081 gold bottom?

We've recently been updated by GM Jenkins on the 10 year USTs priced in silver chart, notably the ratio hitting its upper channel line at around the 1.50 level. GM is expecting a final lower low for gold shortly, before the trend changes back to a bull market.

I decided to see if the gold price was Fibonacci-friendly, and the chart below plots the key retracement levels from the bottom back in 1999 through to its peak in late 2011.

Here's the chart (I manually added the 23.6% level at $1,522):

Who knows what will happen, but the fib levels seem significant, so I'll be saving my pennies to buy the bottom at around $1,081, and I reckon it's coming within the next 5 weeks, in the midst of a liquidity crisis as stock markets take a dive.

I'm not expecting the 61.8% fib level to be hit.

Fun with Fibs

The silverogosphere is in an orgy of self-congratulation following the Chairman of the Federal Reserve's commitment on Thursday to provide $40 billion per month in monetary stimulus (a.k.a QE3) to buy mortgage debt.

In some respects, the cheerleaders merit their day in the sun. I was certainly personally surprised that more QE was actually announced prior to the presidential election, and utterly flabbergasted that Mr Benanke went so far as to essentially commit to stimulus without an end date. Although any sane observer [amongst whom I hope to be able to count myself, although years of being force-fed crystal meth by GM's harem of harpies has somewhat weakened an already tentative grasp on reality - Ed.] has appreciated for some time that the fiscal debt can only be solved practically through one of three broad policies (dollar devaluation; default; mass confiscation from citizens), it still came as something as a surprise to me that the Fed would be so explicit about their choice of option 1, and then be so aggressive about their mode of implementation.

The meme of "QE to infinity" seems apposite, although it's certainly not a done deal. Regardless, whether gold and silver are the best ways to profit from the Fed's decision or not is another matter entirely: a debate perhaps better left for another day. But let's just say that, although I was pleased with the rise in the d'Arc's gold investments, I was disappointed not to have invested more than I had in the resource companies of Kazakhmys (LON:KAZ) and Vedanta (LON:VED), which have both moved by 10% since Bernanke's announcement - compared with gold's 3.5% and silver's 6%  (meaning that Monsieur d'Arc will be getting an especially nice Christmas present this year).

Regardless, the exam question for this post concerns whether or not it is a good idea to immediately throw one's life savings into PMs, resource (and other) stocks, etc. Perhaps the 'Bernanke bounce' was overdone, and Monday/Tuesday will see a sharp retracement. Or perhaps we are now at the start of a serious bull market in stocks that will eclipse the dotcom bubble, and it's best to get on board as quickly as possible.