Gold Price: A Long-Term View

London (Nov 21)  I uploaded a video on my blog a few weeks ago and went over the case for $1,200 holding on gold. Well, gold actually went lower on the 13th of this month although price quickly rebounded, thereafter, above the $1,200 psychological mark. The yellow metal since then has been able to tack on more gains in that we are now trading at the $1,223 level. The lesson here with respect to the supporting trend-line basically being able to support the gold price is that one must always trade with a margin of safety both from the perspective of that $1,200 an ounce physiological number as well as the supporting intermediate trend-line. Many long traders of gold would have actually liquidated their holdings once $1,200 was breached. Price actually went to a low of just over $1,196 an ounce on the 13th before rebounding. However, if one had used maybe a safety net of say 0.05%, the proper stop would have been $1,294 which would have meant long plays could have stayed intact.

So, we most likely have some gold investors who are still on the sidelines because they are unsure of future direction. Price has been in a long-term consolidation pattern since 2013. The crux of the issue whether this consolidation pattern in a continuation pattern or a reversal pattern over the previous trend. The price of gold went through a roaring bull market between 2001 and 2011. After a subsequent downturn which spanned around 2 years, price, as mentioned, has remained pretty range-bound over the past 6 years when viewed on the monthly chart. Therefore, the last clear direction of trend before this multi-year bear market was in the latter stages of 2012 and 2013 when price fell sharply (down-trend). Our job, therefore, is to ascertain whether that down-trend is going to eventually continue or will there be a reversal on the cards.

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