The last time our ‘ Gold Direction Indicator’ was as
positive as today, gold rose from $1220 to $1280. The date was July 12th and we wrote an
article titled: “The Gold Direction
Indicator Just Turned Positive”. Less
than three weeks later price had advanced by $60. Well here we are, and the GDI just turned up
from 52% to 79% (fully bullish).
Following are some charts that support a Rising Precious Metals
Scenario.
This chart, courtesy of goldchartsrus.com, shows the seasonal
tendencies for gold. Disregarding the 5
year trend, (red line), because it includes a four-year long correction – (now
ended), we see a steady historical uptrend in three different measures, all beginning
in the month of August.
This chart is also courtesy of goldchartsrus.com and it shows
US M3 Money supply continues to rise.
The more money in the system (monetary inflation), the higher prices
will rise for items that cannot be produced at will, such as silver and gold
(price inflation).
Featured is the daily gold chart. Price is oscillating around the $1280
level. A breakout at the blue arrow will
be a very bullish signal. The
supporting indicators are positive, including the A/D line at the bottom – it
has already broken out to the upside.
The moving averages have been in positive alignment (blue line above red
line), since late May.
Featured is the weekly bar chart for GDX, the miners
ETF. Price is carving out a large
triangle, and the supporting indicators are positive. The moving averages have been in positive
alignment since November. A breakout at
the blue arrow appears to be just days away, and it will turn the trend very
bullish, with an initial target at the green arrow.
Featured is a chart that compares PHYS the Sprott gold
trust, to the US stock market. The
pattern is a large triangle, and price is breaking out on the upside. If this trend continues, it will cause money
to leave the stock market and move into gold.
Featured is the ten year Palladium chart. Price is breaking out to a 10 year high level. Palladium is often a leading indicator for the precious metals sector. The supporting indicators are positive and the moving averages are in positive alignment and rising.
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Peter Degraaf was for many years a coin dealer - attending coin shows all over the USA and Canada. Upon retiring from the coin business, Peter used his investing experience to develop as a technical analyst. His specialty is the combining of fundamentals with charting.
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The author is not affiliated with, endorsed or sponsored by Sprott Money Ltd. The views and opinions expressed in this material are those of the author or guest speaker, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.
