I've been loving the price action of Gold these past couple of weeks. The question is, "When is the correction going to happen?" According to those I read regularly, gold will not correct until the $US Dollar index tests and bounces off of 0.8197, which is the 1995 low. With the dollar going south in an orderly manner and trading this morning at 0.8329, there's still plenty of room left to run in this current move for gold.
Also, if you look at the chart I put together and linked inthe title of this post you'll a few things that pop out:
- The RSI has crossed 70, into overbought territory, but has not peaked and turned down, as it did in the previous 2 tops on this chart (in Jan 2003 and Jan 2004).
- The MACD did not peak and turn down until it reached $15. It currently resides at $10.
- Using a trick gleaned from Adam Hamilton of Zealllc.com called rGold (where you divide the current price by the 200DayMA, or in this case the 40Week), it get a value of 1.10, where the previous peaks mentioned in point #2 were 1.20 and 1.16 respectively.
- A traditional P&F chart (click through from the chart linked in the title) points to a Price Target of $476. P&F charts are a great tool for editing out the 'noise' of a traditional price chart.
- The current top of the long-term price channel that is in play has a top around $475-$480. It's hard to tell as it's off the chart.
Everything happening in Gold will be even more dramatic in Silver, as it is a thinner and much more volatile market. I would not be surprised to see Silver pass $12/oz before the end of the year. I would also not be surprised to see Silver trade below $8.00 an ounce two months later.
Precious metals are not for the faint of heart, especially with the enemies it has.
Ta,
Comments