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XAU to 237 and Gary's Bet

By Claude Biava

March 16, 2008

[those who have read 'gary' over time realize he does not make predictions, especially firm, guru-like ones. the 230 target noted below was in response to being called out privately by mr. biava to look into the crystal ball which we happen to know first hand is not 'gary's' modus operandi ;-) -- ed]

In a recent short note, the XAU was lamented for its failure to breakout from a multi-years channel in the face of sharply rising Gold prices (see: Continuing under performance of Gold mining shares). By the end of this week, however, the XAU redeemed itself by peaking above the upper boundary of the channel. This prompted a technical revision of the way the channel could be drawn with the result that a steeper channel has now become clearly visible (upper panel in the Chart below).

A simulation was then conducted to identify the potential price that the XAU could attain in the next two weeks to reach the upper boundary of the new channel. The result: XAU 237 (lower panel in the Chart below).

Here is where Gary Tanashian of http://www.biiwii.com comes in. A month ago, we exchanged a number of emails with Gary to express what in retrospect turns out to have been unjustified skepticism about the XAU going much higher than $180, a level around which it had been zig-zagging for a long frustrating time. The exchange ended on Feb.15 when an obviously irritated Gary shot back this rather dry message: XAU to 230! Well, if the simulation turn into reality, Gary will prove right on spot and we'll gladly lose a bet.

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