Steady as She Goes

Gold is looking good again!

It has now broken the 50 day moving average. It has rallied non-stop since January one. It has broken the resistance line running from the 2011 all-time high to the June low, and in the process has formed a giant two year bullish falling wedge. It is within spitting distance of the first major hurdle at $1268, which is the last major top and also the short term overhead resistance line. The next resistance after that is the $1300 level where the 150 day moving average awaits. To top it off the junior miners have been on a tear, their best in a long time.

We have positive divergence in the MACD on the weekly charts which is a strong a signal as any of a major change of trend. The NUGT index of gold miners has seen volume explode in the last three months even while prices have been asleep. To top off the technical indicators, we are now seeing gold rise on days when the US$ rises.

Fundamentally speaking things are also looking bullish. The Shanghai gold exchange handled 2,197 tonnes of gold last year, which is almost the entire worlds mine production. Can you hear the sucking sound of gold leaving the west for the east? The COMEX warehouse is also almost empty, and when it does there will be lots of worthless paper contracts around shouting “default”.

Jim Rickards, a well respected fund manager says Swiss gold refiners are run off their feet and have had to put on three shifts a day to keep up with demand for gold out of Europe and into China. All these bars are going from the 400 ounce metric to the new 1kg metric. China is redefining the market at even this mundane level. Some refiners are now reporting a shortage of stock, something they have never seen before.

Yep, gold is looking good.

God bless

Kevin

 

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