With gold hitting $1770 September 13th, we feel that a quick review of the posts made here on howmuchisgoldworth.net over the past few months is in order.
Way, way, way back in May when gold’s price was slipping and breaching one support level after another, we wrote that ‘Until a secular trend is shown to be broken, it is understood to still be in play‘. Four months later we can now clearly see that the fundamentals of this market have not disappeared, gold has finally run through its consolidation period, is climbing back on the bull and that the secular trend is intact!
In that same article posted May 14th 2012 and entitled ‘Gold Dips Even More‘, we presented the 10-year long term trend line and discussed how gold, then hovering around the $1600 mark, was in danger of breaching it. This could have proven ominous but the following week’s action was spectacular. Gold dipped all the way to $1526 and bounced right back up to $1590 by the weekend. Our article ‘Gold Hits a 4 Month Low‘ pinpointed the bull hammer candlestick posted that week which can now be seen in retrospect to clearly be the low point from which gold’s current rally started.
June 2nd and the article ‘Now That’s What I Call a Bounce‘ had a touch of optimism about it due to the fact that gold have posted a one-day rise of $60! The following article on June 16th also made note that price had climbed back above the 50 Day Moving Average line for the first time in over 3 months. Things were looking up.
Throughout July, gold bored us with no further exciting news. This however was attributed to the Summer Doldrums that is a well known seasonal period of inactivity for both gold and silver. We posted on this topic and exhorted goldbugs to keep strong. Remember, ‘a trend is in play until it is shown to be over’.
Finally in August the news we were all hoping for (and expecting) came. Firstly on August 5th, gold ‘bounced of its 50 DMA‘ rather than sink back below it and secondly by late August, it had crossed back above its 50 MA on the weekly chart and more importantly a MACD crossover had occurred indicating that price momentum was with the bulls. We suggested gold was gearing up for a rally.
Within the space of a month, gold has charged upwards around $150 and almost $250 since its low of $1526 back on May 16th.
So where to now? Where will the peak of this current rally come? I don’t know. But I’ll be sure to be reading the charts and keeping you posted on my thoughts. I’m not a professional but I’ve been tracking the gold charts for over 5 years and I’m invested so my money is where my mouth is.
Fundamentally you have to believe that gold as an asset class is being revalued to the detriment of the US Dollar. If you believe that, join the HowMuchisGoldWorth Blog on facebook and let’s see through $2000 gold together. If not, you are welcome to read QE Maestro Chopper Ben’s blog.