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Silver Analyst
Posted Feb 9, 2016
Gold has been on a roll these past few weeks as it has rocketed from the
lows of $1046 on December 3rd to a high of $1200 this past day. That is an
advance of 17% and doubtless many are wondering if this is the start of a new
multi-year bull market for gold (and by consequence, silver)?
As things stand, gold may be about to encounter some headwinds. First, we
look at the channel that gold has been descending gently down since August
2013. As you can see, gold has touched the top channel line three times in that
period only to fall back to the lower line of the channel.
(Click on image to enlarge)
Obviously, this ping-pong cannot continue forever. Gold is either going to
break through the top line or drop through the bottom line. So, the odds are
that gold will touch the upper line at about $1212 only to fall back. But,
will this mean gold will automatically drop back to the bottom channel line
for a fifth time somewhere in the region of $1000?
To put this in perspective, how far have the previous bull runs within
this weekly channel run? These are tabulated below and should be compared to
the current run up of 17%. In this light, a 17% run is not indicative of what
may or may not lie ahead. However, an anticipated run of 100% or more cannot
start unless it first advances 17%!
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PRICE RUN
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DATES
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GAIN
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$1180.20 - $1433.73
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24/06/13-26/08/13
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21%
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$1182.35 - $1388.54
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30/12/13-17/03/14
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17%
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$1130.02 - $1307.64
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30/11/14-19/01/15
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16%
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May I also offer an opinion on the 200 day moving average which has been
breached by this current move? This average has been breached three times
previously while gold has been bounded by this weekly channel. The truth is
that moving averages are not good technical indicators when the price action
is whipsawing in this manner. What we need to see now is gold breaking
through this upper channel line, but also presses on.
By that I mean, the last 2 1/2 years have been a continuing series of
lower lows and lower highs. So, let’s see if gold can take out the previous
high of January 19th 2015 when gold hit $1307. When that happens, gold would
have moved 20% which technically constitutes a bull market and then perhaps
we can begin to talk about a serious bull market in precious metals.
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