Best of the Week
Most Popular
1.UK General Election BBC Exit Polls Forecast Accuracy - Nadeem_Walayat
2.UK General Election 2017 Seats Final Forecast, Labour, Conservative Lib-Dem, SNP - Nadeem_Walayat
3.UK General Election 2017 Forecast: Conservative 358, Labour 212 Seats - Nadeem_Walayat
4.Theresa May to Resign, Fatal Error Was to Believe Worthless Opinion Polls! - Nadeem_Walayat
5.UK House Prices Forecast General Election 2017 Conservative Seats Result - Nadeem_Walayat
6.The Stock Market Crash of 2017 That Never Was But Could it Still Come to Pass? - Sol_Palha
7.[TRADE ALERT] Write This Gold Stock Ticker Down Now - WallStreetNation
8.UK General Election Results Map 2017 vs 2015 vs Opinion Polls - Nadeem_Walayat
9.Orphaned Poisoned Waters,Severe Chronic Water Shortage Imminent - Richard_Mills
10.How The Smart Money Is Playing The Lithium Boom - OilPrice_Com
Last 7 days
Gold Back With A Vengeance As Bitcoin Bubble Bursts - 26th Jun 17
Crude Oil Trade & Nasdaq QQQ Update - 26th Jun 17
Gold and Silver Ongoing Consolidation May End Soon - 25th Jun 17
Dollar May Become “Local Currency of the U.S.” Only - 25th Jun 17
Sheffield Great Flood of 2007, 10 Years On - Unique Timeline of What Happened - 24th Jun 17
US Stock Market Correction Could be Underway - 24th Jun 17
Proof That This Economic Recovery Narrative is False - 24th Jun 17
Best Cash ISA for Soaring Inflation, Kent Reliance Illustrates the Great ISA Rip Off - 24th Jun 17
Gold Summer Doldrums - 23rd Jun 17
Hedgers Net Short the Euro, US Market Rotates; 2 Horsemen Set to Ride? - 23rd Jun 17
Nether Edge By Election Result: Labour Win Sheffield City Council Seat by 132 Votes - 23rd Jun 17
Grenfell Fire: 600 of 4000 Tower Blocks Ticking Time Bomb Death Traps! - 22nd Jun 17
Car Sales About To Go Over The Cliff - 22nd Jun 17
LOG 0.786 support in CRUDE OIL and COCOA - 22nd Jun 17
More Stock Market Fluctuations Along New Record Highs - 22nd Jun 17
Understanding true money, Pound Sterling must make another historic low, Euro and Gold outlook! - 22nd Jun 17
Green Party Could Control Sheffield City Council Balance of Power Local Election 2018 - 22nd Jun 17
Ratio Combo Charts : Hidden Clues to the Gold Market Puzzle - 22nd Jun 17
Steem Hard Forks & Now People Are Making Even More Money On Blockchain Steemit - 22nd Jun 17
4 Steps for Comparing Binary Options Providers - 22nd Jun 17
Nether Edge & Sharrow By-Election, Will Labour Lose Safe Council Seat, Sheffield? - 21st Jun 17
Stock Market SPX Making New Lows - 21st Jun 17
Your Future Wealth Depends on what You Decide to Keep and Invest in Now - 21st Jun 17
Either Bitcoin Will Fail OR Bitcoin Is A Government Invention Meant To Enslave... - 21st Jun 17
Strength in Gold and Silver Mining Stocks and Its Implications - 21st Jun 17
Inflation is No Longer in Stealth Mode - 21st Jun 17
CRUDE OIL UPDATE- “0.30 risk is cheap for changing implication!” - 20th Jun 17
Crude Oil Verifies Price Breakdown – Or Is It Something More? - 20th Jun 17
Trump Backs ISIS As He Pushes US Onto Brink of World War III With Russia - 20th Jun 17
Most Popular Auto Trading Tools for trading with Stock Markets - 20th Jun 17
GDXJ Gold Stocks Massacre: The Aftermath - 20th Jun 17
Why Walkers Crisps Pay Packet Promotion is RUBBISH! - 20th Jun 17

Market Oracle FREE Newsletter

The MRI 3D Report

Bull Run for Gold Sheer Fantasy or is it Forming the Base for the Next Up Leg?

Commodities / Gold and Silver 2017 May 09, 2017 - 03:05 AM GMT

By: Sol_Paha

Commodities

A complex system that works is invariably found to have evolved from a simple system that works. John Gall

The Gold bugs and Gold experts must be going through hell; almost seven years later and the Gold Markets refuse to follow the path these individuals have laid out for it. Proclamation after proclamation has failed, and the detested dollar much to their angst and surprise has continued to trend higher. Inflation has not taken off as they expected; well at least based on the distorted figures the government issues. The masses believe this data is real and that is all that matters in the end. Truth or a lie is based on a perception and perceptions are driven by emotions, which means that everything is up for debate. What holds true today might not hold true tomorrow or what is deemed valid today might be deemed as rubbish tomorrow.


In Jan of this year, we published an article titled Gold market ready to breakout? A small excerpt is listed below:

 Throughout 2016, we stated we did not expect much from Gold, and we stuck to this forecast, even though many experts went out of their way to report that Gold was ready to soar to the Moon or even to the next Galaxy. In fact, since 2011, we have continuously said that until the Trend turns positive, it would be best to play other lucrative markets, such as the general equities market, the US dollar, etc. During this time several experts stated that Gold was ready to surge and some issued insane targets ranging from $20,000-$50,000. 

You would think that experts would try to release targets that made some sense. After all, Gold has not even traded past $2,000, so it makes one wonder how any individuals with a shred of common sense could issue a target of over  $5,000. Even this target is quite high, and we only envision it being struck under extreme conditions.

It appears nothing has changed and the overall outlook remains as uncertain as it did in 2014, 2015 and 2016. In January we stated that the Gold market had triggered several bullish signals that should have taken Gold to the 1360 ranges. In any other market, such a confluence of bullish signals would have produced a much stronger effect; the word muted is a kind way to describe Gold’s move to date. However, as the overall trend was still neutral, we also stated we were not ready to fully embrace the Gold markets.

Gold has now given the first signal that it is getting ready to test the $1360 ranges with a possible overshoot to the $1380 ranges. A weekly close above $1380 will set up the path for a test of and potential challenge of the 2011 highs. Tactical Investor

 It could not even trade past $1300 on a weekly basis; the word pathetic comes to mind when one examines the Gold markets actions over the past few months. It appears that Gold markets are destined to experience more pain before attempting to challenge the $1300 ranges. Adding to the misery; the dollars consolidation is drawing to an end, and Gold is now trading in the overbought ranges.

The trend is what determines whether we embrace an investment or not. The trend was neutral in back in Jan, and it remains neutral on the long term charts and negative on the short term charts. In other words, the Gold market appears ready to pullback as opposed to breaking out.  We will not embrace Gold until the trend changes as there are many other markets out there that make for a better investment. One such example is the biotech sector; however, one needs to tread with caution as this sector is full of speculative plays.

Gold has been unable to trade above the main downtrend line, and the layer of resistance continues to grow in the $1300-$1350 ranges. The longer it takes a market to trade above a specific zone the stronger the resistance becomes; conversely when it eventually does manage to close above this zone former resistance will turn into support. In the interim, it looks like Gold is headed lower and a weekly close below $1200 could take it as low as $1100. As of Dec 2016, Gold has been putting in higher lows, and as long as this trend is maintained, then the overall long-term outlook will remain neutral.  To change the outlook to bullish, Gold needs to close above $1350 on a monthly basis.

The dollar has been consolidating since Dec of 2016, and the consolidation appears to be drawing to an end. There is a strong zone of support in the 97.80-98.40 ranges, and as long as the Dollar does not close below 97.80 on a weekly basis, the outlook will remain bullish.  Even though the dollar has experienced a strong run over the past few years, the pattern is a lot more bullish for the dollar than it is for Gold

Conclusion
The Gold standard won’t make a comeback for the next several decades as the current generation does not view Gold as money and has shown no interest in trying to find out the important role this metal played in providing financial stability for the past several centuries.  Gold has to be viewed as any other investment; there is a time to buy and hold the investment and a there is a time to close and fold.  As Gold appears to be heading down, it would not be a bad idea to allocate some money to this metal.  The keyword to keep in mind is some and not a lot of money; as we stated earlier, there are many other sectors out there that look more attractive. For example, the biotech sector looks a lot better than Gold and one way to play it would be via the ETF IBB.  

Almost every Bull Market experiences a feeding Frenzy stage; Gold never experienced this stage so from a very long-term perspective, so the odds suggest that the bull market is not dead but in a deep coma.  The feeding frenzy is the point that the masses embrace the investment and that usually marks a long-term top in the markets.  Oil experienced this stage when it traded past $120 and surged past $140 before collapsing.

Genius may have its limitations, but stupidity is not thus handicapped.
Elbert Hubbard

by Sol Palha

www.tacticalinvestor.com

Sol Palha is a market analyst and educator who uses Mass Psychology, Technical Analysis and Esoteric Cycles to keep you on the right side of the market. He and his partners are on the web at www.tacticalinvestor.com.

© 2017 Copyright Sol Palha- All Rights Reserved

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.


© 2005-2017 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

Catching a Falling Financial Knife