Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Virgin Media Fibre Broadband Installation - What to Expect, Quality of Wiring, Service etc. - 21st Jun 21
Feel the Inflationary Heartbeat - 21st Jun 21
The Green Superfuel That Could Disrupt Global Energy Markers - 21st Jun 21
How Binance SCAMs Crypto Traders with UP DOWN Coins, Futures, Options and Leverage - Don't Get Bogdanoffed! - 20th Jun 21
Smart Money Accumulating Physical Silver Ahead Of New Basel III Regulations And Price Explosion To $44 - 20th Jun 21
Rambling Fed Triggers Gold/Silver Correction: Are Investors Being Duped? - 20th Jun 21
Gold: The Fed Wreaked Havoc on the Precious Metals - 20th Jun 21
Investing in the Tulip Crypto Mania 2021 - 19th Jun 21
Here’s Why Historic US Housing Market Boom Can Continue - 19th Jun 21
Cryptos: What the "Bizarre" World of Non-Fungible Tokens May Be Signaling - 19th Jun 21
Hyperinflationary Expectations: Reflections on Cryptocurrency and the Markets - 19th Jun 21
Gold Prices Investors beat Central Banks and Jewelry, as having the most Impact - 18th Jun 21
Has the Dust Settled After Fed Day? Not Just Yet - 18th Jun 21
Gold Asks: Will the Economic Boom Continue? - 18th Jun 21
STABLE COINS PONZI Crypto SCAM WARNING! Iron Titan CRASH to ZERO! Exit USDT While You Can! - 18th Jun 21
FOMC Surprise Takeaways - 18th Jun 21
Youtube Upload Stuck at 0% QUICK FIXES Solutions Tutorial - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations Video - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations and Trend Analysis into Market Correction - 17th Jun 21
Stocks, Gold, Silver Markets Inflation Tipping Point - 17th Jun 21
Letting Yourself Relax with Activities That You Might Not Have Considered - 17th Jun 21
RAMPANT MONEY PRINTING INFLATION BIG PICTURE! - 16th Jun 21
The Federal Reserve and Inflation - 16th Jun 21
Inflation Soars 5%! Will Gold Skyrocket? - 16th Jun 21
Stock Market Sentiment Speaks: Inflation Is For Fools - 16th Jun 21
Four News Events That Could Drive Gold Bullion Demand - 16th Jun 21
5 ways that crypto is changing the face of online casinos - 16th Jun 21
Transitory Inflation Debate - 15th Jun 21
USDX: The Cleanest Shirt Among the Dirty Laundry - 15th Jun 21
Inflation and Stock Market SPX Record Highs. PPI, FOMC Meeting in Focus - 15th Jun 21
Stock Market SPX 4310 Right Around the Corner! - 15th Jun 21
AI Stocks Strength vs Weakness - Why Selling Google or Facebook is a Big Mistake! - 14th Jun 21
The Bitcoin Crime Wave Hits - 14th Jun 21
Gold Time for Consolidation and Lower Volatility - 14th Jun 21
More Banks & Investors Are NOT Believing Fed Propaganda - 14th Jun 21
Market Inflation Bets – Squaring or Not - 14th Jun 21
Is Gold Really an Inflation Hedge? - 14th Jun 21
The FED Holds the Market. How Long Will It Last? - 14th Jun 21
Coinbase vs Binance for Bitcoin, Ethereum Crypto Trading & Investing During Bear Market 2021 - 11th Jun 21
Gold Price $4000 – Insurance, A Hedge, An Investment - 11th Jun 21
What Drives Gold Prices? (Don't Say "the Fed!") - 11th Jun 21
Why You Need to Buy and Hold Gold Now - 11th Jun 21
Big Pharma Is Back! Biotech Skyrockets On Biogen’s New Alzheimer Drug Approval - 11th Jun 21
Top 5 AI Tech Stocks Trend Analysis, Buying Levels, Ratings and Valuations - 10th Jun 21
Gold’s Inflation Utility - 10th Jun 21
The Fuel Of The Future That’s 9 Times More Efficient Than Lithium - 10th Jun 21
Challenges facing the law industry in 2021 - 10th Jun 21
SELL USDT Tether Before Ponzi Scheme Implodes Triggering 90% Bitcoin CRASH in Cryptos Lehman Bros - 9th Jun 21
Stock Market Sentiment Speaks: Prepare For Volatility - 9th Jun 21
Gold Mining Stocks: Which Door Will Investors Choose? - 9th Jun 21
Fed ‘Taper’ Talk Is Back: Will a Tantrum Follow? - 9th Jun 21
Scientists Discover New Renewable Fuel 3 Times More Powerful Than Gasoline - 9th Jun 21
How do I Choose an Online Trading Broker? - 9th Jun 21
Fed’s Tools are Broken - 8th Jun 21
Stock Market Approaching an Intermediate peak! - 8th Jun 21
Could This Household Chemical Become The Superfuel Of The Future? - 8th Jun 21
The Return of Inflation. Can Gold Withstand the Dark Side? - 7th Jun 21
Why "Trouble is Brewing" for the U.S. Housing Market - 7th Jun 21
Stock Market Volatility Crash Course (VIX vs VVIX) – Learn How to Profit From Volatility - 7th Jun 21
Computer Vision Is Like Investing in the Internet in the ‘90s - 7th Jun 21
MAPLINS - Sheffield Down Memory Lane, Before the Shop Closed its Doors for the Last Time - 7th Jun 21
Wire Brush vs Block Paving Driveway Weeds - How Much Work, Nest Way to Kill Weeds? - 7th Jun 21
When Markets Get Scared and Reverse - 7th Jun 21
Is A New Superfuel About To Take Over Energy Markets? - 7th Jun 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Breakout, Starts MAJOR Uptrend, Not Too Late to Jump Aboard

Commodities / Gold and Silver 2012 Nov 25, 2012 - 10:17 AM GMT

By: Clive_Maund

Commodities

It was a big day for the Precious Metals sector on Friday, for the dollar broke down hard from its recent uptrend, and at the same time gold broke out upside from its Head-and-Shoulders base pattern. Silver anticipated this – it broke out from its base pattern back on Tuesday. These developments have grave implications for the dollar, but at the same time are believed to mark the start of major uptrends in gold and silver.


On its 6-month chart we can see how gold dipped to our 'buy spot' just above $1700, detailed in the last update, in the process marking out the Right Shoulder of the small Head-and-Shoulders bottom that formed just above its 200-day moving average. Everything is now in place for a significant uptrend to get going, with the breakout on Friday from a fine completed base pattern, and the MACD indicator showing that there is still plenty of immediate upside potential from here.

Gold 6-Month Chart

The 3-year chart is useful as it makes clear that there is an important resistance level overhead, approaching and at the $1800 level, which has turned the price back on 3 occasions over the past 13 months. It is thus clear that the surmounting of this resistance will be a strongly bullish development that should quickly lead to gold challenging its all-time highs, resistance at which should not prove to be much of an impediment, and it should then go on to break out to new highs and carry on up in a vigorous uptrend.

Gold 3-Year Chart

Gold looks just fine on its long-term chart going back to the inception of the bullmarket. It got over-extended by the latter part of 2011, which is why we have since had the lengthy period of consolidation. Now it is looking ready to break out to new highs and enter another major uptrend, and if it should make a run at the top return line of its long-term uptrend channel, as looks likely given the outlook for the dollar, then we are looking at a target for this uptrend in the $2700 - $3000 area - perfectly reasonable.

Gold 13-Year Chart

The long-term chart for gold also makes clear that all of the talk about it being manipulated and suppressed is arrant nonsense. With it having risen from about $250 at its low at the start of the bullmarket to its latest peak around $1900 last year, it doesn't look like the manipulators have had much success, does it? The fact of the matter is this - if currencies get debased, and they are being debased at an ever increasing rate, then gold, which is real money, is going to go up to compensate. That's all that there is to it, except for the fact that when hot money shows up on the scene in force, that is when these 'bedrock' gains resulting directly from currency debasement are going to be compounded by a speculative mania and that hasn't even started yet.

The latest COT chart for gold shows that while Commercial short and Large Spec long positions are on the high side, they are not at levels that should give rise to serious concerns regarding the potential of the nascent uptrend, given the other bullish factors that we have observed.

Gold COT

The recent deep unpopularity of PM sector stocks relative to gold is a sign that the sector has been out of favor, and is therefore an indication that we are, or close to a bottom. This ratio is showing its 2nd worst reading since the surge out of the bearmarket bottom late in 2000, the worst being that of the 2008 panic selloff.

HUI Index over Gold: Long-Term

Beautiful technical action in the dollar. On Friday it broke down decisively from the modest little uptrend of recent weeks that took it up to mark out the Right Shoulder of a fine large Head-and-Shoulders top. On the 6-month chart we can see this recent action in detail, and how the advance failed beneath heavy overhead resistance, and was signaled in advance by 2 successive bearish 'shooting star' candlesticks.

US Dollar Index 6-Month Chart

The 18-month chart for the dollar shows it is now dropping down to complete the Right Shoulder of the Head-and-Shoulders top. This may take a little while yet, but once the support at the bottom of this important pattern fails - and the Fed are doing everything in their power to make sure it does - then the dollar could plunge. So US readers should book and pay for their overseas vacations without delay and change over your holiday money too.

US Dollar Index 18-Month Chart

In conclusion, gold is viewed as having broken out on Friday to start a MAJOR uptrend, and thus it is certainly not too late to go long or add to existing positions, and one can guard against the (now considered remote) possibility of this rally being a B-wave trap by simply placing stops, either below the support at $1700, above which the Right Shoulder formed, or below the early November lows.

By Clive Maund
CliveMaund.com

For billing & subscription questions: subscriptions@clivemaund.com

© 2012 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 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