Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Silver Price 2021 Roadmap - 22nd Jan 21
Why Biden Wants to Win the Fight for $15 Federal Minimum Wage - 22nd Jan 21
Here’s Why Gold Recently Moved Up - 22nd Jan 21
US Dollar Decline creates New Sector Opportunities to Trade - 22nd Jan 21
Sandisk Extreme Micro SDXC Memory Card Read Write Speed Test Actual vs Sales Pitch - 22nd Jan 21
NHS Recommends Oximeter Oxygen Sensor Monitors for Everyone 10 Months Late! - 22nd Jan 21
DoorDash Has All the Makings of the “Next Amazon” - 22nd Jan 21
How to Survive a Silver-Gold Sucker Punch - 22nd Jan 21
2021: The Year of the Gripping Hand - 22nd Jan 21
Technology Minerals appoints ex-BP Petrochemicals CEO as Advisor - 22nd Jan 21
Gold Price Drops Amid Stimulus and Poor Data - 21st Jan 21
Protecting the Vulnerable 2021 - 21st Jan 21
How To Play The Next Stage Of The Marijuana Boom - 21st Jan 21
UK Schools Lockdown 2021 Covid Education Crisis - Home Learning Routine - 21st Jan 21
General Artificial Intelligence Was BORN in 2020! GPT-3, Deep Mind - 20th Jan 21
Bitcoin Price Crash: FCA Warning Was a Slap in the Face. But Not the Cause - 20th Jan 21
US Coronavirus Pandemic 2021 - We’re Going to Need More Than a Vaccine - 20th Jan 21
The Biggest Biotech Story Of 2021? - 20th Jan 21
Biden Bailout, Democrat Takeover to Drive Americans into Gold - 20th Jan 21
Pandemic 2020 Is Gone! Will 2021 Be Better for Gold? - 20th Jan 21
Trump and Coronavirus Pandemic Final US Catastrophe 2021 - 19th Jan 21
How To Find Market Momentum Trades for Explosive Gains - 19th Jan 21
Cryptos: 5 Simple Strategies to Catch the Next Opportunity - 19th Jan 21
Who Will NEXT Be Removed from the Internet? - 19th Jan 21
This Small Company Could Revolutionize The Trillion-Dollar Drug Sector - 19th Jan 21
Gold/SPX Ratio and the Gold Stock Case - 18th Jan 21
More Stock Market Speculative Signs, Energy Rebound, Commodities Breakout - 18th Jan 21
Higher Yields Hit Gold Price, But for How Long? - 18th Jan 21
Some Basic Facts About Forex Trading - 18th Jan 21
Custom Build PC 2021 - Ryzen 5950x, RTX 3080, 64gb DDR4 Specs - Scan Computers 3SX Order Day 11 - 17th Jan 21
UK Car MOT Covid-19 Lockdown Extension 2021 - 17th Jan 21
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21
Covid and Democrat Blue Wave Beats Gold - 15th Jan 21
On Regime Change, Reputations, the Markets, and Gold and Silver - 15th Jan 21
US Coronavirus Pandemic Final Catastrophe 2021 - 15th Jan 21
The World’s Next Great Onshore Oil Discovery Could Be Here - 15th Jan 21
UK Coronavirus Final Pandemic Catastrophe 2021 - 14th Jan 21
Here's Why Blind Contrarianism Investing Failed in 2020 - 14th Jan 21
US Yield Curve Relentlessly Steepens, Whilst Gold Price Builds a Handle - 14th Jan 21
NEW UK MOT Extensions or has my Car Plate Been Cloned? - 14th Jan 21
How to Save Money While Decorating Your First House - 14th Jan 21
Car Number Plate Cloned Detective Work - PY16 JXV - 14th Jan 21
Big Oil Missed This, Now It Could Be Worth Billions - 14th Jan 21
Are you a Forex trader who needs a bank account? We have the solution! - 14th Jan 21
Finetero Review – Accurate and Efficient Stock Trading Services? - 14th Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Gold Over-extended But Extremely Strong Suggesting Mild Corrections

Commodities / Gold & Silver Jan 15, 2008 - 09:46 AM GMT

By: Clive_Maund

Commodities

Best Financial Markets Analysis ArticleThis is not the time to get bogged down with minor details, and thus risk losing sight of the big picture, which is that gold is now in a powerful uptrend that has a lot further to run. For this reason we will only look at long-term 8-year charts in this update.

On the 'normal' 8-year chart in dollars, gold is clearly well on its way, and to some it may look overextended already, after its strong advance of recent weeks, but there are 2 important factors that we will consider that are not on this chart, which indicate that it is likely to ascend to much higher levels before this uptrend is over.


Charts don't come much more bullish than this - the steady ascent from the low early in 2001 through 2005 was followed by a dramatic acceleration in the rate of advance, and this acceleration can be expected to continue as the Fed continues to undermine the dollar with low interest rates in a desperate attempt to rescue the major banks and Wall St, and as money supply continues to balloon, not just in the United States, but worldwide. There was considerable fanfare some days back when gold broke out above its nominal highs of early 1980, but this was actually a fairly meaningless event given that the money supply has expended enormously and the dollar has been savaged in the years that have followed, so that if gold were just to attain its 1980 value in real terms, it would have to ascend to something like $4000 an ounce. Thus it is clear that there is still plenty of upside potential, especially as the world financial system is in a much more fragile state than it was back in 1980.

When we look at the 8-year gold chart measured against the Euro, we see that gold has only just broken out against this currency, and it is clear that it has the potential to rise much further. Even if it only succeeds in staging an advance of similar magnitude to that which occurred in 2005 - 2006, we are talking about very substantial gains from here, and with the money supply set to expand rapidly in the Eurozone as it battles to remain competitive, there is a good chance that the uptrend will be even stronger. The growth in money supply is a global phenomenon stoking the fires of inflation worldwide, which will of course make gold the natural refuge for those seeking to preserve capital - and not just preserve it, but benefit from capital gains as well - and gold rising in real terms must eventually suck in a lot of hot speculative money so that a continuation of strong gains in time becomes a self-fulfilling prophecy.

With regard to gold's target for this powerful uptrend (not its ultimate target), readers are referred to the Silver Market update, for gold can be expected to top out at about the same time as silver, which will probably be when silver hits the top of its major uptrend channel. Note that gold's ascent will slow ahead of silver topping out, as it leads silver, which tends to makes its strongest gains in the later stages of uptrends in gold.

With many gold stocks approaching normal overbought extremes on short-term oscillators, a lot of traders are wondering if the time has come to take profits, in expectation of a reaction. The view here is that although this would normally be the case, the current uptrend is destined to be a long and powerful upleg, and corrective action is therefore likely to be modest and probably only involve periods of consolidation, that may even be upwardly skewed, and thus leave behind premature profit takers who may find themselves waiting for a reaction that never happens. A good example of this is provided by StreetTracks, which was recommended on the site as a strong buy on December 20th. Take a look at the StreetTracks chart shown here and compare what is going on now to what happened back in September. In early to mid-September StreetTracks looked critically overbought on its RSI and MACD indicators shown at the top and bottom of the chart - it was, but after 2 or 3 weeks of sideways consolidation it continued much higher. This is what is considered to be likely to happen now not just with StreetTracks, but with a wide range of larger gold stocks.

The StreetTracks chart posted on the site on 20th December is shown below-

By Clive Maund
CliveMaund.com

© 2007 Clive Maund - The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maunds opinions are his own, and are not a recommendation or an offer to buy or sell securities. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. 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.

Clive Maund Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules