Symbol “GLD” for Gold is a good buy betwween $85 and $90

I just found this site, and it is a very good read. Take a look on his opinion on Gold and paper currency devaluation. I think it could happen.

Decision Moose, by William Dirlam

Check out his site at

Moose favorite, gold, is tightly linked to the health of the financial system. This week, as the threat of money center bank nationalization, and the uncertainties that “quick and easy” solution entails from a global perspective, receded, the price of gold also fell. A new UK bank bailout program right before their major banks began reporting also calmed the fear. (Gold is a more global story than the other assets in the model. Its demand is more universal.)

Gold has had a nice run, surpassing its July ‘08 high last Friday, but this week it lost in five straight sessions. That the stimulus package and now the new budget are raising interest rates, and will most likely weaken the US economy, remains a disinflationary concern for gold bugs. It is to gold bugs’ outright dismay that Treasury Secretary Geithner, who was closely linked to the Lehman decision, seems to be wary of taking any further chances that could lead us to another precipice.

The good news is that by maximizing the cost of government while minimizing the economic benefit, we should eventually debase the currency something fierce. Moreover, the higher interest rates implicit in this strategy are already hitting the mortgage market, reducing mortgage values, pressuring bank assets and working to reinvigorate systemic fear.

So the model continues to hold gold. It is a near term bet that the Feds will get the bank bailout wrong, but it is also a long term bet that, even if they do get it right, paper currency will become worthless in the process.

If you missed the Moose signal ($89.59), GLD has considerable technical support between 85 and 90.  While it could go lower than that, getting in mid-signal in that range might be reasonable. At the moment, very little else seems attractive, even though I continue to feel that the chances of severe near term economic weakness and possibly even deflation far outweigh any alternative.