A Golden Era Building For Gold

For those of you that missed it Gold was a great asset to own….in the first decade of this century. From a low under $300 in 2001 it ran to a peak 10 years later at nearly $2000, a 675% gain. Everyone that followed Gold was a genius, and how could you not be? All it ever did was go up. But then it stopped going up. Gold moved mostly sideways through 2012.

No need to worry, they said, we saw this kind of stagnation with a small dip in 2009 as well, it will recover. They were the experts so of course you believed. But it did not go up. Instead it embarked on a 3 year bear market. By the end of 2015 it had given up 50% of that 10 year run higher. The experts were be laughed at, heckled, as they spoke of this minor weakness. Makes you wonder why anyone would embrace being called an expert.

Gold did start to move higher in 2016, but it quickly fizzled out and pulled back again into the end of the year. 2017 started with a move to the upside as well. This one may have more sticking power though. In fact this could be the beginning of another big bull run in Gold. Why? The chart above gives many indications to follow.

The first is the price itself. As it is moving up in a steady rise, it is encountering some resistance at the 2016 high, but not a pullback. This is also at the 38.2% retracement of the early 2000’s run. And it is happening on rising volume, accumulation. Momentum has shifted as well. The RSI is now over the mid line with the MACD positive.

Finally there is a pattern emerging. Can picture the decline as a 3 step process from the top to the 2012 low, then up to the 2012 high, then back to the 2015 low, forming an A-B-C correction? If so then you might also see the 2016 move up and pull back as Waves I and II of a new Impulse Wave higher. Wave III is often the longest and may have started in 2017. The key to continued advancement is a move over $1370. Keep an eye on that level.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.