Gold declined last week. Silver did too. The miners too.
The macro is not yet aligned fundamentally, to back a new gold bull market leg or especially, a new gold miner leg up. So with daily charts compromised (but not quite broken) last week with respect to the seasonal bounce, we hold open gold to the mid-1500s and HUI to the gap at 212 as possibilities before a real bottom.
However – and this is man stares at chart stuff – the sheer beauty of the monthly gold chart endures. Here is a fresh, non-marked up version of the chart.
It’s characteristics include a higher right side Cup rim than the left, a Handle (bull flag) declining on lessening volume, overbought momentum indicators now eased nicely. It takes a LOT of overbought pressure to drive a monthly chart to the level RSI came to in 2020. The correction was deserved and it is also healthy. Again, the question is whether gold will investigate the 1550 area prior to a firm low or not.
But the picture is beautiful and for that reason I am not going to set my own analysis in stone. Not with the risk/reward proposition now favoring gold to cyclical, risk ‘on’ asset markets. I just stared at the monthly, free of my usual mark-ups, and was taken aback by its beauty.
That Handle, whether it’s done making new downside or not (my guess is it’s not) can be viewed as a ramp; a ramp that is slowly, arduously letting the last passengers off the train who jerked onto the train in 2020.
Okay well, let’s adulterate the chart with just one mark-up, which I don’t believe we’ve reviewed previously. The Handle has made a 38% Fib retrace from the cyclical bear market low already. A 50% retrace would bring gold well into the 1550s, still within a bull market structure.
Combined with the macro risk/reward, this big picture technical view should prove to be very rewarding at some point in the coming months if we stay patient and keep perspective.
