Graceland Updates 4am-7am
Feb 14, 2017
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The world's ultimate asset, gold bullion, continues to act superbly. That's because fundamental, cyclical, and technical price drivers are very positive and are in play at the same time.
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Please click here. Double-click to enlarge this gold chart.
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Gold is poised to burst upside from a small bull wedge pattern, after recoiling from $1250 area resistance.
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Support sits at $1222, and testimony from Janet Yellen today along with key US retail data tomorrow could be the fundamental catalysts that launch gold's next assault on that $1250 zone.
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Experienced technicians understand that their charts only work when fundamentals are creating the technical picture they see on their charts.
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In the case of the US dollar, most amateur technicians were very bullish on the dollar at the start of the year. They've essentially been crushed by "Trumpamentals".
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The bottom line: The fundamentals of the Trump administration are changing institutional liquidity flows from a safe haven orientation to a US economy risk-on orientation.
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That's very positive for gold, as a pick-up in Main Street (small business) business activity can be very inflationary. That's because money velocity tends to accelerate quite dramatically when the pick-up gets underway.
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Please click here. Double-click to enlarge this dollar versus franc chart.
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The dollar has broken down from a head and shoulders top pattern. A textbook rally back towards the neckline is now in play.
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Once that rally is completed, the dollar is likely to retest the recent lows, helping gold surge through the resistance at $1250.
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Please click here. Double-click to enlarge this weekly gold chart.
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While $1250 is acting as short to intermediate term resistance, gold seems poised to move even higher in the big picture, likely to about $1300.
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Two key trend lines of resistance converge in the $1300 area, making that the next likely upside stop for gold above $1250.
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Please click here. Double-click to enlarge.
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That's another look at the weekly chart for gold. Both the RSI and Stochastics oscillators are crossing above the 50 area. That tends to happen when upside momentum is increasing.
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Also, note the highs in the $1306 - $1307 area. They are also likely to offer a profit booking opportunity for happy gold bugs soon!
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It turns out that I'm not alone in my view that gold can rally to $1300. Please click here. Dominic Schnider is a heavyweight economist at monster bank UBS, and he sees gold making a beeline for $1300 too!
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Institutional money managers gain extra confidence when top economists recommend an asset class, and having Schnider "on side" with higher prices will certainly build that confidence.
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Please click here. Double-click to enlarge. Silver bugs should also feel confident right now.
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That's because silver is beginning to act with less volatility, and more like a slightly "jacked" version of gold! On rallies, silver is outperforming gold against the dollar, but not excessively so.
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Modest outperformance by silver against gold tends to occur during long term uptrends. Wild outperformance tends to occur when the precious metal sector is ending a big uptrend. The current action in the silver market is ideal for investors.
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As good as gold and silver bullion look, the stocks that mine these mighty metals look even better, as they typically do when economic growth and inflation come into synergistic play.
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Please click here. Double-click to enlarge this GDX chart. Happy gold stock investors should wait for my $26 – $27.50 target zone before booking any more profits. That target may be achieved this week. Valentine's Day is today, and may I suggest as a gift... something golden!
Thanks!
Cheers
St
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