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Source: Clive Maund for Streetwise Reports 02/18/2018
A read of the gold charts is indicating that a breakout and new bull market are simply a matter of time, says technical analyst Clive Maund.
Gold continues to prepare to break out of its giant Head-and-Shoulders bottom pattern. As we can see on its 8-year chart below, this base pattern has been developing for getting on for five years now, so it has major implications. Upside volume has been building for a long time, driving volume indicators higher, a sign that a breakout and new bull market are simply a matter of time, and not much at that now.
There has been much grumbling and muttering within the gold community about how “The Cartel” and the Comex etc are holding the gold price in restraint by means of naked short selling, and hitting the market with supply when trading is thin during public holidays and overnight and so on, but the fact of the matter is that the reason why the Precious Metals sector has taken a back seat for years now is that there have been hotter games in town, like Biotech, Bitcoin, Cannabis, the FANGS, Tech generally, etc. and endless quantities of cheap money to bid them up into the stratosphere. So that is where the action has been. However, to everything its season and all that is coming to an end now, and the recent plunge in the stock market was a “shot across the bows” to all who would heed it, indicating that a new bear market is starting, but don’t go telling that to the buy the dip crowd.
Gold does well and has its best bull markets when stocks generally are in a bear market, so don’t get fooled by PM stocks falling with the stock market at this time—that won’t last. Thus it is worth observing that gold has outperformed stocks during the period since the stock market plunge started—it is back where it was before the plunge, which is more than can be said for stocks.
Before looking at gold’s shorter term 6-month chart, it is worth taking a quick detour to see how it is getting on against some other currencies. Over the past year or so the dollar has dropped quite hard, with the prime beneficiary of this drop being the euro, which has risen substantially. Therefore we should not be surprised to see that gold has dropped against the euro during this same period. What is interesting to observe on the 8-year chart for gold in euros, however, is that it has arrived at the lower boundary of a large uptrend that has turned the price back up on two occasions already. This suggests that gold is going to rise even in euros, and since the dollar is expected to continue to drop, regardless of any brief countertrend rally, it means that it should rise faster …read more
Source:: The Gold Report
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