HowMuchIsGoldWorth.net

Well hello goldbugs. I’m sure now there is a smile on most of your faces after gold finally broke out of the $1600 trading range where it had been stuck for the best part of several months drifting listlessly in the ‘Precious Metal Doldrums’. Whether it was the fervour of Indian Independence Day or some nefarious Central Bank dealings, 15th August will be duly noted as the day the trade winds got behind gold and set a course for the $1800 barrier. 14 days is all it took to fly through the $1700 mark and onwards to $1770 where it has now paused. Wednesday 19th September’s candlestick was a Doji(D) which is generally understood to mean that there is indecision among traders as to the direction price will take. This clearly was the case as the action over the following days was quite up and down.

Firstly a Hanging Man(HM) was posted in which price dropped but then clawed its way back up to close at the day’s open. The following day, September 21st, gold surged upwards in a Shooting Star(SS) motion but was forced back down by close to once again be held at the $1775 mark.

So what does it all mean? Well gold is clearly being tested and a pullback as indicated by waning momentum on the Daily MACD chart may yet be on the cards before gold can attack this level once more.

But don’t count on it. A quick reversal is still quite possible as it has happened many times in the past and caught many a ‘shorts’ unaware. Long term momentum is still upwards so tread carefully.

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.