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
How to Protect Your Site from Bots & Spam? - 21st Aug 19
Fed Too Late To Prevent A US Housing Market Crash? - 21st Aug 19
Gold and the Cracks in the U.S., Japan and Germany’s Economic Data - 21st Aug 19
The Gold Rush of 2019 - 21st Aug 19
How to Play Interest Rates in US Real Estate - 21st Aug 19
Stocks Likely to Breakout Instead of Gold - 21st Aug 19
Top 6 Tips to Attract Followers On SoundCloud - 21st Aug 19
Holiday Nightmares - Your Caravan is Missing! - 21st Aug 19
UK House Building and House Prices Trend Forecast - 20th Aug 19
The Next Stock Market Breakdown And The Setup - 20th Aug 19
5 Ways to Save by Using a Mortgage Broker - 20th Aug 19
Is This Time Different? Predictive Power of the Yield Curve and Gold - 19th Aug 19
New Dawn for the iGaming Industry in the United States - 19th Aug 19
Gold Set to Correct but Internals Remain Bullish - 19th Aug 19
Stock Market Correction Continues - 19th Aug 19
The Number One Gold Stock Of 2019 - 19th Aug 19
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19
Central Banks Move To Keep The Global Markets Party Rolling – Part III - 14th Aug 19
You Have to Buy Bonds Even When Interest Rates Are Low - 14th Aug 19
Gold Near Term Risk is Increasing - 14th Aug 19
Installment Loans vs Personal Bank Loans - 14th Aug 19
ROCHE - RHHBY Life Extension Pharma Stocks Investing - 14th Aug 19
Gold Bulls Must Love the Hong Kong Protests - 14th Aug 19
Gold, Markets and Invasive Species - 14th Aug 19
Cannabis Stocks With Millennial Appeal - 14th Aug 19
August 19 (Crazy Ivan) Stock Market Event Only A Few Days Away - 13th Aug 19
This is the real move in gold and silver… it’s going to be multiyear - 13th Aug 19
Global Central Banks Kick Can Down The Road Again - 13th Aug 19
US Dollar Finally the Achillles Heel - 13th Aug 19
Financial Success Formula Failure - 13th Aug 19
How to Test Your Car Alternator with a Multimeter - 13th Aug 19
London Under Attack! Victoria Embankment Gardens Statues and Monuments - 13th Aug 19

Market Oracle FREE Newsletter

The No 1 Gold Stock for 2019

Gold Gearing Up For Strong Bull Market Rally Into 2008

Commodities / Gold & Silver Oct 22, 2007 - 01:16 AM GMT

By: Clive_Maund

Commodities Best Financial Markets Analysis ArticleGold's situation now bears a striking resemblance to the period from September through November 2005, which was followed by an almost uninterrupted advance that resulted in near 60% gains. At that time gold had just broken out from a 7-month triangular consolidation to become overbought. A consolidation pattern then formed which involved it correcting back to the vicinity of its 50-day moving average, after which it took off.

Using the spot gold price (average of London am and pm fixes), gold spent 18 consecutive days above the preceding high ($454 set on 6th Dec 2004) and the consolidation concluded with a “testing low” that stopped $3 above the 6th Dec 04 high, after which gold climbed nearly 60% in an almost uninterrupted advance. Gold looks set to react soon back to the $725 area (spot) and then take off much higher.

The present pattern is very similar to what occurred back in the Fall of 2005. If the pattern is repeated then we are now in mid-consolidation which should conclude in about a month's time with a test of support at and just above the May 06 high at $725 (spot). If this holds it will be a strong buy signal, especially as there is a very rare $9 gap in the price structure between $689 and $698 on the spot gold chart. Should this occur as expected we can look forward to a massive ramp in the gold price, which many big gold stocks are already clearly signaling is an upcoming development. We will therefore be highlighting the better gold stocks for accumulation on the site, regardless of whether it reacts back or not, and should it react back over the next several weeks back towards the $725 area (spot), $733 (futures), it will be viewed as presenting an exceptional opportunity to take positions in stocks at better prices, and also for more experienced traders to leverage returns by means of Traded Options.

As we can see on the 3-year chart, despite gold rising by nearly 60% from September 2005 through May of 2006, it stopped to take a breather 3 times on the way up, once soon after breaking out in September 2005 as detailed above, and during each of these consolidations the price reacted back close to, or a little below, its 50-day moving average, which enabled it to recharge for the next runup. Thus it is reasonable to expect it to do the same shortly, and as we will see, there are other factors, principally the latest COT data, which suggest that it will react back in coming weeks towards to its 50-day moving average. This should throw up one of the biggest buying opportunities in this long gold bull market.

On the 3-year chart we can see that, following its breakout last month, gold opened up a substantial gap with its 50-day moving average, hence the current slowed rate of advance, and we will now look at recent action in more detail on the 6-month chart. On this chart we can see that gold has broken out of a Distribution Dome over the past week or so, but that it has since made hesitant progress with the advance from mid-September taking the form, at least to date, of a Rising Wedge, which suggests that a reaction is imminent. Others factors also suggest that a reaction is to be expected shortly and the most likely target for any such reaction is the $730 area, where there is an obvious line of support and longer-term support dating back to the May 06 high, with additional support in the vicinity of the 50-day moving average which is rising up beneath. Given the strongly bullish longer-term outlook we will therefore seize upon any such reaction as a MAJOR BUYING OPPORTUNITY.

The latest COT chart shows the Large Specs falling over themselves with enthusiasm for gold, with the Commercials short positions rising to a high level, so that both are viewed as being at an extreme that calls for a reaction soon. As the former usually get their backsides kicked we will want to see this moderate in coming weeks, which should fit with the anticipated reaction.


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.

Post Comment

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

6 Critical Money Making Rules