With Europe awash with stories of the imminent default of Greece, and German banks told to prepare for a 50% haircut on Greek bonds [Bloomberg], this would be a good time to buy gold. Any rupture in current bailout arrangements would cause a flight to safety, driving Treasury yields even lower and gold even higher. Breakout above $1900 would confirm a fresh advance, with a target of 2100*.
* Target calculation: 1900 + ( 1900 – 1700 ) = 2100
Added in response to question: Reversal below 1800 is unlikely but would warn that the ascending triangle formation has failed.
I notice your Momentum Oscillator Index changes from 21 periods to 63 periods for FX and commodities. Is there a reason for this? Thank you.
21-days is used for secondary advance/correction; 63-day for primary trend.
Hi.. Have a look at the weekly charts. And tell me what you think.
regards
Sim
Weekly chart of spot gold shows ascending triangle formation above its trend channel. Breakout above 1900 would signal accelerating up-trend. Reversal below 1800 — all bets are off.
Looks to like it is forming a pennant
It appears to me that everything scary recently has failed to drive gold to new highs. It appears that everyone who wants into gold as protection against the financial calamities has already bought, and there is a very ominous double top that has formed. As a contrarian, I think it looks like a great time to sell your gold, and go short. After a rather significant correction, to around 1500, it would be a good time to load up again for the next round of scary financial situations that are not already discounted in today’s price. An unpopular opinion, for sure, but that’s what makes it so likely to happen.
Steve, Thank you for a well-considered opinion. I think we both agree that gold is in a long-term up-trend. Second, that the up-trend has accelerated since early 2011. Third, that a double-top would signal correction to test $1500. Where we differ is on whether gold has completed a double-top. More in my post today. Regards, Colin