• 5 hours Smart Investors Are Betting On This COVID-Proof Industry
  • 6 hours Disney’s Digital Pivot Could Be Its Saving Grace
  • 11 hours What Does Tesla's Million-Mile Battery Mean For Green Energy?
  • 13 hours U.S.-China Tensions Are Reaching A Boiling Point
  • 15 hours Gold Remains Strong Amid Increasing Economic Uncertainty
  • 1 day Morgan Stanley And Goldman Sachs Are Betting Big On This Budding Industry
  • 1 day Global Corporate Debt Soars To $9 Trillion
  • 1 day The Fed’s Slippery Slope
  • 1 day Precious Metals Pulled Ahead Of The Pack In The First Half Of 2020
  • 1 day Tesla Faces $20 Billion In Short Interest
  • 1 day China's Economic Recovery Remains Tepid
  • 2 days Silver Inches Closer To $20
  • 2 days The Secret Life Of Lithium
  • 2 days The Pandemic Proof $53 Billion Industry Wall Street Can’t Ignore
  • 2 days Will Gold Hit $2,000?
  • 2 days Trump’s Proposed Regulation Could Slow The ESG Boom
  • 3 days India To Auction 41 Coal Assets
  • 4 days Eldorado Sees Gold Production Soar In Second Quarte
  • 4 days Do Gold Stocks Still Have Upside Potential?
  • 5 days The S&P 500’s Top Companies Hold $2.5 Trillion In Debt
Is The Bull Market On Its Last Legs?

Is The Bull Market On Its Last Legs?

This aging bull market may…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

  1. Home
  2. Markets
  3. Other

What Will the Next Two Months Unfold for Gold?

In my earlier article entitled, "Where is support likely to be found?" I made the case for gold finding support between $360-$370 after its steep early October plunge. To date, December gold has passed this important test of its strength and did find strong support between $365-$370, followed by a strong rally to its present $389 level. What can we now expect from gold and gold stocks in the remaining part of 2003?

I noted then that "The sharp 'pullback'...will likely serve its purpose of shaking out the weak hands, scaring away the public from getting involved in precious metals, and also of allowing the strong hands to accumulate more gold at lower levels. A sharp pullback such as [what occurred earlier this month] is the true test of a commodity's strength, because any commodity currently in the hands of the 'smart money' traders will not break the dominant upward trend on a pullback; rather, it will only serve as a temporary pause before the uptrend is resumed." This has proven itself to be true in gold's case as indeed the insiders used the pre-Halloween scare as an excuse to add to long positions at bargain prices. The quick pullback and equally quick recovery should be enough to convince the skeptics that gold is indeed in strong hands and is not as vulnerable to a major decline as some believe.

Would you like to see a picture of strength? Then take a look at the weekly chart for spot gold below. Those 30/60/90-week moving averages rising in unison at a good rate of change reflect underlying support, momentum, and a dominant interim and long-term cycle series that are still in the ascending phase.

Want to see another beautiful picture? Then look at this 1-year chart of the Rydex Precious Metals Fund (RYPMX) below. Note the bullish 10/20/30-week MA configuration, also reflective of strong support and continued upside momentum heading into 2004. All in all, I'd say these two charts do a good job of depicting in graphic terms what we can expect for the yellow metal heading into 2004, and it shows that the yellow metal's tide is still rising.

What about the gold stock market? Below is the 10-year monthly chart of the XAU index. You will note the presence of a well-defined parabolic bowl in this chart, with the mid-point (or "vertex") occurring around the early part of 2001. This suggests that next year should be an overall bullish one for gold stocks since the dynamic phase of the up-curve begins in 2004 based on the symmetry of this bowl. This bowl allows the XAU leeway for a pullback all the way down to around the 75 level before being violated, and not coincidentally the 75 area is where a number of chart pivots and moving averages intersect. This gives the XAU built-in "plunge protection" over the next 2-3 months in a worst-case scenario.

Back to homepage

Leave a comment

Leave a comment