Chavez, gold and a permit the strory of "" rugs to riches ""or "" riches to rugs ""; soon we shall know.

This is a part of the article which could concern us .It was to long to print in full.

12/22/2008 7:24:55 AM | Nicholas Jones

Gold charts gleaming with potential If you are a reader of mine, and/or are a competent individual, you have identified the underlying fundamentals that are bullish all that is tangible. In living your lifestyle, whether it's playboy or otherwise, you can't help but hear about these bullish fundamentals.

The government is creating fiat currency at an absurd rate. Money supply and demand fundamentals are no different than anything else. When you increase the supply, the value drops, and it takes more dollars to buy the same good. You might know this as inflation.

The fundamentals have been identified and discussed extensively. The charts are a different story, and something is occurring that is very unique.

The charts of almost all the commodities (energy, agriculture, metals) are consolidating and creating a base in which they could rally from, and they are all doing it in almost absolute unison.

There was a massive double bottom put in at $700 /oz. This by itself was notable but not a concrete sign. Double and triple bottoms have been meaningless pops during this downward slide that frequently lacked the ability to act as support during mass liquidations.

From the $700 level, gold bounced a couple times testing the $770 range, which, until recently, was acting as resistance. Two weeks ago this resistance was broken in impressive form and we saw gold rally to the $830 level.

What's encouraging is that after gold pulled back from the $830 level, $770, which had acted as resistance, was now holding strong as support. It's also important to note that the $830 level acted as support during late Sept. and early Oct. As the chart notes, resistance often turns to support and support often turns to resistance depending on market direction. This chart is a good representation of that notion.

I would not be surprised at all to see gold test both the $770 and $830 levels a couple of times before doing anything definitive. If we break out, look for gold to test its 200 day MA and then test the $925 level from there. In this case, I would then expect the $830 level to act as support.

The most encouraging thing for me is the timing. Let's not forget that most were still sleeping off their New Year's Eve hangover when gold and oil began their now famous rallies of 2008.

I would like to end this piece with a sort of random tidbit. I've discussed the divergence between spot and futures gold prices. When I wrote the article over a month ago, I discussed the potential of a contract failure in the December COMEX gold futures contract.

Gold bug rumors

Well, these rumors have become much discussed around the gold bug's watering hole. The folks turning out these articles discuss major banks in Eastern Asia looking to take delivery on large amounts of gold from the COMEX.

IF, and that's a big IF, the rumors are true, there will be more gold desired for delivery than the COMEX has access too. The consequences of this would obviously be spectacular.

Regardless, there are 20 days until final notice and then delivery date on the December gold contract. I'm just saying...