Golden Minerals Company

By David Nichols

On Friday we got the latest reading from the ECRI on their Weekly Leading Index (WLI) -- a highly sensitive and accurate gauge of future economic recovery -- and the growth rate came in at a 5-year high. The economy is roaring back.

Here's today's accompanying quote from the Managing Director of the ECRI:

Gold is especially sensitive to changes in the money supply, and contrary to what most people believe, in a floating exchange-rate economy the central bank -- the Fed -- has only a limited direct effect on the money supply. Most of the money sloshing around in the U.S. economy --and most of the growth and contraction -- comes from the private sector.

So if an economic recovery collides with super-loose monetary conditions, then gold should head for the stratosphere -- and it looks like this is exactly what is happening. It's therefore not surprising that the gold market is sniffing out this economic recovery, and the pattern looks to be gearing up for a major upside launch as the new 86-day timing cycle gets underway.

We are now 5 days into this new cycle, and it's been a very positive start. The daily fractal dimension is still over 55 as gold has worked itself into position for an explosive breakout higher, finally punching through the stubborn $941 - $944 energy level.

The 150-minute chart is also fully loaded with energy, as over the past few days gold has been moving sideways just under the highs.

This is a highly bullish consolidation pattern, and it should send gold up a quick $20 or $30 once the breakout comes. All that is needed now is some sort of spark, and the gains should come quickly after that.

So let's look for this upside burst to come early next week, and let's stick with the plan to hold on up to $990, where we'll watch closely to determine if we need to get out temporarily, or just hang on to catch the really big move.