Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
This Is Your Last Chance to Dump Netflix Stock - 19th July 19
Gold and US Stock Mid Term Election and Decade Cycles - 19th July 19
Precious Metals Big Picture, as Silver Gets on its Horse - 19th July 19
This Technology Everyone Laughed Off Is Quietly Changing the World - 19th July 19
Green Tech Stocks To Watch - 19th July 19
Double Top In Transportation and Metals Breakout Are Key Stock Market Topping Signals - 18th July 19
AI Machine Learning PC Custom Build Specs for £2,500 - Scan Computers 3SX - 18th July 19
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

Gold Market Update - Gold Gearing Up for a Powerful Rally

Commodities / Gold & Silver Jul 12, 2007 - 09:24 AM GMT

By: Clive_Maund


There are several factors coming together now to suggest that a powerful rally in gold is drawing near, and because they are so clear and potent, they do not require a long-winded description.

On the 2-year chart for gold we can see how it has stabilized above an important support level in the $635 - $640 area over the past few weeks. This after having broken below a long-term trendline dating back to mid-2005 that may have caused some to short the metal and who thus must be growing increasingly concerned at the lack of downside follow through, although they are probably finding solace in gold's insipid performance over the past week as the dollar has fallen sharply.

What makes the current situation so potent is the fact that all of gold's moving averages are now bunched tightly together along with the price itself. This is a rare technical event that typically spawns a big move - and with the long-term moving averages still trending upwards, the odds favor a breakout to the upside. A fascinating point to observe, which has been remarked upon before, is that gold has found support and turned up at or above its 300-day moving average throughout its bull market, only breaking below it once in mid-2004, and now it is positioned just above it - and the much more commonly used 200-day.

With gold having rounded over earlier in the year beneath the heavy resistance towards last year's highs and then entered an intermediate downtrend, there was clearly a danger that it was “double topping” with those earlier highs. However, for various reasons this danger is thought to be receding. Not least of these is the recent COT data. A couple of weeks ago we observed that the COT structure was at its most bullish since early January, after which time gold went on to rally by about $80, with the Commercials' short positions having shrunk to a level which in the past has marked a turning point, and sure enough gold has started to turn up again.

On the latest COT chart, shown below, we can see that the Commercials' short position has increased noticeably over the past week, although it is still at a level regarded as bullish. This has coincided with gold rising up into its still falling 50-day moving average, so we may see some more backing and filling before the anticipated larger advance gets underway. Gold remains beneath the resistance of a Distribution Dome pattern and in the recent past it was mentioned that buyers could either buy with a stop below $635 or buy on a break above the Dome resistance. This strategy remains valid, although because of the close stop it is thought to make more sense to buy here. Buyers and holders should remain aware of the capacity of big market players to generate a whipsaw false breakdown below $635, and so be prepared to reverse positions rapidly. The stakes are high here - and big money would love nothing better than to shake out the little guy and mop up his remaining holdings before the big move.

The widespread assumption that for gold to rise significantly the dollar has to break down below its crucial long-term support at 80 on its index may not be true. This is because rampant currency inflation and debasement is not a phenomenon confined just to the US dollar - it is now occurring across a broad front worldwide, in part due to the practice of competitive devaluation - and is actually necessary to prevent a disastrous liquidity crisis developing, which has become a chronic and intractable threat due to the proliferation of debt, debt instruments and derivatives. We live in a world in which the population is expanding, growing wealthier, and the money supply in many countries is growing inexorably - in other words money and the ability to create more of it - and thus debase its value - is infinite, whereas the supply of gold and silver is finite and cannot be greatly increased. This is a recipe for an ongoing long-term bull market in the Precious Metals.

By Clive Maund

© 2007 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

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Robert Cassidy
12 Jul 07, 19:09
Gold vs. Paper

The obvious maledictor behind global currency debasement and inflation is of course the US FED , as a means of allowing the USA to spend beyond its means .

Only a drastic devaluation of the US dollar ala 1971 ...and interest rates that exceed inlation rates can possibly restore global monetary order Inflation in any measure is nevertheless the most expedient form of non legislative foprm of taxation for any government - and therefore will not likely cease.

sincerely -

Robert Cassidy -Denver ,Colorado -USA

Post Comment

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

6 Critical Money Making Rules