Gold Is Not Going Anywhere Folks

Sorry to break it to the Gold bugs, but Gold is not going anywhere anytime soon. Considering the run gold has had for the past few years, this statement might sound outlandish and not-credible but after reading some factors I list below, hopefully you see why I do not see gold going anywhere.

 

$MACRO Reasons

  1. QE3 will not happen….at least for some time. At the last $FED presser, Ben Bernanke, in my opinion, showed some signs of why he was not thinking about “printing more money”. First off, the $FED did not announce QE3 (check). When asked about NGDP targeting (which seems to be inflationary), he refuted it. Besides those points, the economy, while not surging in growth, is growing/improving at a modest pace (thus easing some pressure off Bernanke-pun intend). Bernanke would much rather Washington do something than the FED.
  2. The ECB will not monetize the debt of the PIIGS  to make a significant dent anytime soon. “Kick the can down the road” type of stuff will happen here.
  3. Gold is not acting as a safe haven. If gold was truly a pure safe haven play, it would be up everyday there were market fears. I have seen it down/sell off on risk-off days.
  4. The Dollar has been strong. Contrary to what we saw during QE2 where the dollar just trended down, the dollar is actually acting as a safe haven/deflation/risk-off play.

Technical Analysis

While Gold’s long term up trend and bullish chart is still intact, there are several reason I believe why we can see a big nasty range for gold for the next few months.

 

1) Correlation with the Swiff Franc
In my opinion, this is huge. I posted this chart back 2 months ago, and its playing out SO well.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2) Possible lower high & an establishment of a big range
As you see, Gold put in a nice double top formation then proceeded to have a nasty correction.  After nearly meeting the measured move target of ~$1,500 (which I think it has a good shot of re-testing), Gold has retraced a little more tan 61.8% of the drop. However it found resistance a few days ago, naturally at $1,800. This could possibly be a lower high on the weekly chart. I suspect Gold is going to be range-bound for the next few months between $1,475 and $1,900.

 

3) Gold went parabolic, and now is “resting”
Even if your a gold bug, you have to admit that Gold went a little parabolic to $1,900. Now it is just “resting” (consolidating) as it lets the long term up trend-line catch up. Simple as that.

 
 
 

Tags: $GLD, $GC_F, $DGP, $DZZ

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus
Jerry Khachoyan Blog