Gold Futures (U.S. $588.40)

Gold appears to be building an important intermediate term top in a powerful long term uptrend. It has regularly exceeded my short term expectations, having done so again last week when quotes briefly touched important "round number" resistance at $600 per ounce, before falling back. If and when we do see a correction, my intermediate term downside target is now in the $540 - 550 area, revised upward from $500.

Can you explain why the price of gold has exploded while inflation is almost non-existent? The escalating tsunami/hurricane/tornado issue may be at the core of the explanation for the flight into gold.

CNN tells us that in the U.S. there have been 400 tornadoes so far this year, compared to 92 by this date in 2005. Four hundred tornadoes, and we're only a week into the U.S. tornado season? Given a 26 week season, if nothing changed, that would mean 10,000 twisters across the U.S. north east before the season was over. That's before we consider the prospect of another devastating U.S. hurricane season, or the reality that nature is busy running amok in many other places on our small planet.

Natural disasters? A pandemic? Terrorism? Oil/gas supply problems? A nuclear event? Somewhere, somehow there is a rational explanation for the current aggressive activity in the price of gold.

Gold producers are reaping a huge bonanza at current prices, and should continue to do so through intermediate term corrections, so long as the long term uptrend is undisturbed and inflation remains in check.