I’ve been golds whipping boy for a few years now. And for good reason—the metal had been stuck in a giant consolidation pattern that offered no reason to buy into the metal – beyond short termed trades as it girated up and down in that consolidation. In fact, the long termed chart below was posted on a prior blog suggesting that the precious metal was forming a H&S bottom – but had yet to break the neckline at around $1360 or so. Well, guess what just happened? You can see on the long termed chart that gold is now through its neckline. The maintenance over $1360 will imply a target back into the old highs near $1800. From there, it will once again have a ceiling to break. We shall see how it looks when it gets there – no sense speculating at this point. But it does look good to return into the $1800 range.
The chart below shows us how early we are in the breakout phase. You really don’t want to see this neckline breakout fail. But odds are, it looks like it will hold. Sure, the shorter momentum indicators are getting overbought. But they haven’t hooked down yet. This gives gold a bit more time to work its way up past that neckline before it pulls back. Meanwhile, cumulative moneyflow is moving up – although still contained within its prior box. I’d say that its looking like it will follow-up with more positive momentum.
Meanwhile, the XGD ETF representing the producers is looking to have broken its downtrend, and through significant resistance.
This is the beauty of technical analysis – the discipline forces you to stay with the chart pattern. I’ve avoided gold for years. But now, I can finally say that the chart is bullish. I don’t own any gold directly as at this point, but I have taken a back-door approach by owning the SLV ETF (silver) for a catch-up play. This was explained on my BNN show on Thursday.
Keith at the Toronto MoneyShow Sept 20th at 4:15pm
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8 Comments
Wow! $1800 could cause the “better” miners to go ballistic! Thanks, Keith.
Hi Keith I agree gold could have a great run if the trends hold. Question we took our initial investment out of Kirkland Lake Gold just before the breakout. Now that it’s well past 1400 should we increase out position back up?
Thanks
That’s the $10,000 question, isn’t it? I would give it a bit, see if bullion holds support for the next week or so–then you might leg back into gold stocks. I haven’t looked at Kirkland specifically–but the sector looks encouraging.
Keith – Great timing. Is it possible you have a technical analysis on bitcoin? Thanks
James I covered bitcoin on my BNN show the other day. In a nutshell, it is looking like it put in a rounded bottom. There are points of resistance along the way to its old highs–each will need to be blown through. Its – as always- a higher risk trade, but from the technical perspective it was encouraging. I dont own any.
Keith,
Thank you for sharing your thoughts on bitcoin. I will watch your BNN show later.
I don’t own any bitcoin either. But, my opinion on bitcoin has changed with recent news of major banks start accepting bitcoin payments and trades, and mining bitcoins is a lot cleaner and safer than mining gold. I could be wrong. I thought bitcoin gives you more leverage than gold. My 2 cents. Thanks again.
Don’t you mean your 2 bitcoins? Ha ha!
Hello Keith,
Your spot on, gold is getting a bid, which indicates, troubled times ahead. Even utilities are making all time highs. The V bottom from Dec. 24 till now, for some reason, I cannot explain, does not feel right. Here we are at all time highs on the S&P 500, yet, I cannot see the ‘big money’ aka ‘smart money’ pouring more money into this market, especially at these lofty levels.
I really believe this trade war with China is a sideshow, the real issues are the U.S economy overheating (inflation-wages) and the rest of the world, slowing. Here we are 10 years of quantitative easing to get us to this point, and now the federal reserve is indicating more quantitative easing, possibly in July (lower interest rates). This too me is totally crazy, and only serves the ultra-wealthy in the U.S…….whereas the middle-lower income families will be stuck with the debt bill, which is increasing exponentially. The big banks, GM, Ford, etc… should not have been bailed out with tax payers money 10 years ago, they should have been let them fail. And put the greedy CEO’s in jail who knew full well leveraging 40-1 was a prescription for disaster.