Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Breakout Alert, Powerful Uptrend Imminent

Commodities / Gold & Silver 2009 Oct 06, 2009 - 09:24 AM GMT

By: Clive_Maund

Commodities

Best Financial Markets Analysis ArticleThe impending gold breakout has been so long in the making that it has engendered a "we'll believe it when we see it" mentality amongst most market participants. What this means of course is that most will miss out on the big easy gains that will accrue during the dynamic phase of the next major uptrend and will turn up late at the party, as usual. We ourselves have had lingering doubts engendered in large part by the perceived risk of a dollar rally, but these doubts are now dissipating for reasons that will be set below.


When you follow something on a day-to-day basis, or even an hour to hour basis, it is easy to slip into a situation where you "don't see the wood for the trees" and the best way to combat this natural tendency is to zoom out and look at long-term weekly or even monthly charts. So that is what we will do now.

On the 5-year weekly chart for gold we can see that everything is now in place for a MAJOR RALLY in gold to commence. It has managed to hold the high ground for weeks following its upside breakout from a Triangle, and is repeatedly pushing at the resistance approaching its highs. Yesterday's action was strongly bullish. With all moving averages in bullish alignment, THIS RESISTANCE IS ABOUT TO FALL.

Two lingering doubts that have beset us in recent weeks, and presumably not just us, have been the possibility of a sizeable snapback rally in the dollar, and the high Commercial short position and Large Spec long position. With regard to the former, we have already deduced that there is now no scope for a sizable dollar rally. This is because the US government and Fed have backed themselves into a corner where they only have one option, which is to print (money) - thus the much greater risk is of a dollar collapse going forward. The world is much more aware of this US predicament than at the time of the big dollar rally last year. With regard to the COT figures this is now thought to be a "red herring" which is putting a lot of traders off gold right at the time when it is due to explode upwards. This is because we are in an extraordinary situation and we now expect the Commercial short positions and Large Spec long positions and open interest to continue to expand rapidly and dwarf previous measurements as gold ascends rapidly, as happened in 2001 - 2002.

The key point to grasp here is that this rally is going to be BIG. The major consolidation in gold has been going on for about 19 months now, so gold has built up a tremendous amount of energy for its next move. This is the 5th attempt to break above the March 2008 high, the other 4 attempts, after March 2008 itself, occurring in July 2008, February and May of this year, and the attempt now in progress. Thus it should be quite clear that once gold breaks clear above the MAJOR RESISTANCE at this level, it is not going to settle for some pitiful $50 - $100 gain - it is going up at least $300 and very possibly of the order of $500 - $600 and this gain should be achieved in short order over the space of three to six months or so. Silver will go wild when this happens.

Before we close it is worth taking a look at gold in another major world currency, especially with the dollar set to disappear down the gurgler. So we will now examine a parallel 5-year weekly chart for gold in Euros, which is very similar to its chart in Swiss Francs. This chart is clearly strongly bullish with a major uptrend remaining in force. After a breakout and strong rally early in the year, gold reacted back on its Euro chart to the important support level shown in the vicinity of its rising 200-day moving average where it has stabilized and started to turn up in readiness for the next run. With its moving averages in bullish alignment and its MACD indicator having turned up and broken above its moving average, it is ready for this next run, which will be signalled by a breakout above 7.04, the importance of the resistance at this level being more clearly visible on shorter term charts. The position of the MACD near to neutrality provides plenty of leeway for a major rally.

To conclude, gold is in position to embark on a major uptrend here that is expected to result in it tacking on a 30% - 60% gain in the space of about 6 months. Silver should make spectacular gains during the same period and PM stocks, after finally overcoming resistance approaching their highs, should ascend upwards in an accelerating arc. TRY TO MAKE SURE THAT YOU DON'T MISS THIS.

8.20 am EDT on 6th October 09. Gold at $1028.60 at time of posting – just below the breakout point.

By Clive Maund
CliveMaund.com

For billing & subscription questions: subscriptions@clivemaund.com

© 2009 Clive Maund - The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maunds opinions are his own, and are not a recommendation or an offer to buy or sell securities. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications.

Clive Maund Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

no consustency
06 Oct 09, 10:53
too late

no consistency, flipped from bearish to bullish in a second not good enough


Post Comment

Only logged in users are allowed to post comments. Register/ Log in