Massive Parabolic Slingshot Move Starting in Gold
Technical Analyst Clive Maund shares his thoughts on the current state of the gold market and explains why he believes you should buy gold.
Because gold has not done all that much since its April/May peaks, many investors are unaware of the magnitude of the upleg that has begun, so the purpose of this update is to make it crystal clear why this upleg is destined to be so massive, for both fundamental and technical reasons.
With regard to the fundamental reasons why gold's still nascent major upleg is set to be so enormous, Doug Casey has just done an excellent and timely job of setting it all out in Gold's Next Explosive Move, which relieves me of this task, freeing me up to concentrate on the technical aspects, although I may add a few observations of my own.
The first and by far the most important point to be made in this update is that taking the inflation of the past decade or so into account, gold had been stuck in a gigantic trading range until as recently as the Spring of this year that dates all the way back to its 2011 peak which capped its great 2000's bull market as we can see on the long-term chart below that goes all the way back to the start of the millennium on January 1, 2000.
Observe the skewed grey-shaded support and resistance zones marking the upper and lower boundaries of the trading range skewed to take account of inflation during the years that this range formed. While various commentators made a big deal of gold's nominal new highs in 2020 and late last year, these were not new highs when inflation was taken into account real new highs have occurred just since the Spring of this year.
It is thus clear that the decisive breakout that occurred this Spring was of momentous importance as it has ushered in what promises to be gold's most spectacular bull market to date, which is hardly surprising considering what is going on in the world with money creation having gone parabolic that it set to drive rampant inflation trending in the direction of hyperinflation and attendant extreme currency devaluation and the proliferation of war partly as an act of desperation as a gambit to deflect the public's attention away from the real causes of the ballooning global economic crisis which is, of course, the past reckless actions of Central Banks, none more so than the Federal Reserve.
In short, we are looking at a perfect storm that will lead to gold doing a "moonshot." Notice that this chart is free from unnecessary and distracting clutter like proliferations of trendlines and silly overcomplicated wave counts, although it is worth clarifying that the giant trading range has taken the form of a "Cup & Handle Continuation Pattern" as drawn on the chart which parallels a similar pattern on the long-term silver chart.
True gold aficionados will probably like this chart very much please feel free to print out a large-scale version of it to place on the wall, and you may, of course, want to frame it.
Armed with the understanding gleaned from gold's very long-term chart, we can put the actions of recent years into context. So on the 7-year chart, we can see that the reason it kept "hitting a wall" at $2100, which started with the 2020 peak, was that it was bumping up against the top of the giant upsloping range that we delineated on the very long-term chart, and waiting for things to get bad enough for it to break higher into the next major upleg, which it has now clearly done.
The reason that the gold price spluttered sideways over the past several months is that it stopped to consolidate the March/April breakout, which resulted in an extremely overbought condition, as shown by its MACD indicator. Now that this has unwound, it is starting higher again, and as it advances away from the trading range, the rate of advance is likely to accelerate.
The shorter-term 7-month chart is very useful as it helps us to appreciate that the new upleg that is following on from the consolidation into June/July is now well underway with the price making new highs, but is still in its earliest stages with the parabolic uptrend shown set to slingshot gold higher.
Everything on this chart supports continued and accelerating advance the new highs, the moving averages being in bullish alignment, the strong On-balance Volume line also making new highs and improving momentum with the MACD showing that there is plenty of room for continued gains.
Investors can, therefore, buy gold and most gold-related investments with confidence.
| Want to be the first to know about interestingGold investment ideas?Sign up to receive the FREE Streetwise Reports' newsletter. | Subscribe |
Important Disclosures:
Statements and opinions expressed are the opinions of the author and not of Streetwise Reports, Street Smart, or their officers. The author is wholly responsible for the accuracy of the statements. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Any disclosures from the author can be found below. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.For additional disclosures, please click here.
Clivemaund.com Disclosures
The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. 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. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks cannot be construed as a recommendation or solicitation to buy and sell securities.