Gold – 26 Mar

Paper gold confirmed what looked to be a bottoming process last week. Price closed way up on climbing volume. I guess the paper players are running in the opposite direction, believing the Bernank is going to inflate after all. So silly really. The argument is not really an argument, government will always inflate in order to protect itself. The gold chart is noise and it nothing other than paper flying about in search of a trade that can produce yield. It is counter-productive to the saver and should be seen as a curiosity, where one can massage one’s ego and use it to time an entry into a physical gold order. It is an ego thing because dollars measured in 2 figures are insignificant to where the price of physical gold is going. I filled because I cheated. 1630 was close enough to 1625 for my ego. Unfortunately 1600 was not in the cards. Oh well, God willing we will have many more opportunities buy in the future. Hint: if the sun comes up it is a great opportunity to buy physical gold.

Price closed right at resistance around both the 18 day moving average as well as the 200 day moving average. Another close above the 200 day MA will activate the hedge funds and the trading bots, indicating a bullish technical environment. Further resistance is coming from the 45 day moving average at our old friend chart resistance near 1710. Support is coming from the swing low and Fibonacci support near 1627. RSI is neutral at 50. MACD is setting up a bullish cross and stochastic has crossed 20 and has given up the embed. When stochastic crosses 20 following embedded status (3 consecutive days below 20) price will target the nearest moving average. We are there with a close above the 18 day moving average.

The technical case is improving while the fundamental case remains unchanged, physical gold is a raging buy at any price. Look for a test of 1710 and the formation of a higher low reaction. A 4 to 6 week run higher looks to be in the cards.

Gold traders should stop here and the savers should perk up. The longer term chart is showing a textbook inverse head and shoulders pattern in play. All we need is a right shoulder to trace out a low higher than 1523. Barring the end of the paper gold market, that bottom is in. Look for a play to 2080 as the year unfolds.

Well, look where price reversed, right at the trend line forming the bottom of the trend channel. The price range between 1800 and 1525 is clear. this is the 9th test of the trend line. This is a strong trend. Believe in it. It is telling you something very important.

Look where reversal occurs in the monthly technicals. Right where you would expect at support in RSI and stochastic. This is a strong trend. This trend is telling you something.

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