Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Coronavirus Coming Storm Act Now to Protect Yourselves and Family to Survive COVID-19 Pandemic - 19th Feb 20
Future Silver Prices Will Shock People, and They’ll Kick Themselves for Not Buying Under $20… - 19th Feb 20
What Alexis Kennedy Learned from Launching Cultist Simulator - 19th Feb 20
Stock Market Potential Short-term top - 18th Feb 20
Coronavirus Fourth Turning - No One Gets Out Of Here Alive! - 18th Feb 20
The Stocks Hit Worst From the Coronavirus - 18th Feb 20
Tips on Pest Control: How to Prevent Pests and Rodents - 18th Feb 20
Buying a Custom Built Gaming PC From Overclockers.co.uk - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20
China Under Reporting Coronavirus COVID-19 Infections, Africa and South America Hidden Outbreaks - 12th Feb 20
Will USD X Decline About to Trigger Precious Metals Rally - 12th Feb 20
Copper Market is a Coiled Spring - 12th Feb 20
Dow Theory Stock Market Warning from the Utilities Index - 12th Feb 20
How to Get Virgin Media Engineers to FIX Hub 3.0 Problems and NOT BS Customers - 12th Feb 20
China Under Reporting Coronavirus COVID-19 Infections by 66% Due to Capacity Constraints - 12th Feb 20
Is Coronavirus the Black Swan That Takes Gold To-Da-Moon? - 12th Feb 20
Stock Market 2020 – A Close Look At What To Expect - 12th Feb 20
IBM AI Mega-trend Tech Stocks Investing 2020 - 11th Feb 20
The US Dollar’s Subtle Message for Gold - 11th Feb 20
What All To Do Before Opening A Bank Account For Your Business - 11th Feb 20
How and When to Enter Day Trades & Swing Trade For Maximum Gains - 11th Feb 20
The Great Stock Market Dichotomy - 11th Feb 20
Stock Market Sector Rotation Should Peak Within 60+ Days – Part II - 11th Feb 20
CoronaVirus Pandemic Stocks Bear Market Risk 2020? - Video - 11th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Has Gold Lost Its Glitter Again?

Commodities / Gold & Silver 2009 Dec 11, 2009 - 02:29 PM GMT

By: Sy_Harding

Commodities

Best Financial Markets Analysis ArticlePeriodically through the bull market for gold that began in 2001, after gold has rallied significantly off an intermediate-term low the media belatedly picks up on what has happened and becomes very excited about gold and its prospects. That’s usually an indication that the intermediate-term move is just about over, with one more spike up created by additional investors getting caught up in the media’s excitement, and jumping in.


With long-term forecasts that gold will someday be at $2,000 an ounce or $3,000 an ounce it may work out long-term to buy at an intermediate-term high. But it’s very difficult to hold onto gold over the long-term due to its volatility. So even in a bull market for gold, gold investors are often subject to whipsaws, buying near intermediate-term tops only to see gold plunge quite sharply, forcing them to bail out with losses when the media then turns sour on gold.

I much prefer to invest for the intermediate-term moves, periodically taking profits when pullbacks threaten, and have been successful enough at it over the last 22 years to be quite frequently ranked in the Top-Ten Gold Timers in the U.S.

The most recent excitement for gold began in October when it broke out above the resistance around $1,000 an ounce, resistance that had halted each of its previous four rallies of the past two years.

On that breakout, forecasts became widespread that gold would reach $1200 an ounce, a 20% further gain, sometime in the first half of next year. However, in the excitement money poured into gold so fast that it reached that goal in a matter of weeks.

Two weeks ago, gold bugs who had been forecasting $1,200 an ounce excitedly raised their targets to $1,500 and $1,600. When analysts at some Wall Street firms jumped on the bandwagon and began to also forecast $1,500 the gold bugs remained in front by hiking their forecasts again, to $2,000 and even $2,500 an ounce.

With that, I said (to my subscribers), “Perhaps over the long-term, but the problem is what might happen in the intermediate-term on the way to the long-term, particularly given the way gold has surged up to a fairly significant overbought condition above its 30-week moving average.” (It was that same spiked-up overbought technical condition that had provided the warning at the previous rally tops).

And sure enough, just two days later the bottom dropped out of gold. In just six trading days, from Friday to Friday, it plunged $118 an ounce, from its record peak at $1,226 to its intraday low this Friday at $1,108.

We gave our subscribers two potential support levels that might stop the decline. The first was at gold’s short-term 21-day moving average, which was at $1,144, and if that was broken that next potential support would be at the intermediate-term 30-week m.a., at $1,010 an ounce.

Since the 21-day moving average failed to provide support, gold breaking below it mid-week, I’m not expecting gold’s correction to end until it reaches its 30-week m.a., around $1,010. We’re also likely to see the media more soured on gold before it reaches its next low, more likely to be pointing to its negatives than awaiting the resumption of its upside.

Of course I could be wrong, and a lot of traders think I am and have been trying to catch the bottom by jumping back in almost every day this week. That has created a number of brief rally attempts almost every day. But so far, before the day is over those anxious traders have been handed their heads as gold reversed and declined to a still lower low.

I advise more patience. If gold is indeed going to $1,500 or $2,500 an ounce the difference between getting back in at $1,010 or $1,125 will not be as great as the damage that can be done by being whipsawed a few times jumping in prematurely.

Sy Harding is president of Asset Management Research Corp, publishers of the financial website www.StreetSmartReport.com, and the free daily market blog, www.SyHardingblog.com.

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

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

6 Critical Money Making Rules