Gold Pauses At Key ResistanceStewart Thomson
June 28, 2016
- In a boxing ring, size must be respected. In the same ring, a heavyweight champion fighter tends to absolutely destroy a flyweight fighter. In the gold market, size must also be respected.
- Please click here now. Double-click to enlarge this fabulous GDX weekly chart.
- Trading volume size must be respected, and since late 2014 GDX volume has increased dramatically. In mid-2015, the already-huge volume size intensified, and even more so in 2016.
- There’s no question that the $27 area highs represent significant resistance for GDX, and a pause in the upside fun at this point in time is perfectly normal.
- Given the incredible value-oriented institutional enthusiasm about gold and gold stocks now, I’m very confident that any pause or pullback from $27 will occur on very light volume.
- Overall, from a technical perspective, GDX and most gold stocks are performing at an “A Grade” level.
- Please click here now. Double-click to enlarge this weekly gold chart. The $1320 area low of April 2013 is a significant hurdle for gold bullion, as is the May 2013 area of $1336.
- Gold bulls are battling the bears right now in this important price zone, just as gold stock bulls are battling gold stock bears in the $27 area in GDX.
- The bottom line is that on a weekly chart basis, gold must close above $1336 and GDX must close above $27.61 to open the door to another significant price advance for the precious metals sector.
- Do I think the bulls will succeed? Of course I do, but I’ll dare to suggest that in the Western gold community, emotions often run “hot”. Even a small pause or pullback in the price of gold and GDX can produce outright panic amongst investors.
- I’d like to see as many Western gold community “citizens” as possible move beyond that mindset, and take a more relaxed approach to their holdings of the ultimate asset.
- Institutional Brexit fears were large enough to push gold into the $1320 - $1336 resistance zone. Without more fears, gold will have a difficult time continuing its advance.
- Please click here now. COMEX margins are being increased, and that also adds weight to the idea that gold needs a rest.
- Also, please click here now. Double-click to enlarge this important weekly gold chart that is priced in British pounds.
- Gold surged out of a beautiful bull flag pattern ahead of the Brexit, and made it to the 1000 GBP price zone, which is massive resistance.
- If the gargantuan love trade of China and India can come to the rescue of fear traders that are facing strong resistance at GDX $27, gold $1320, and gold 1000 BGP, any pullback now is likely to be mild and short-lived.
- On that note, please click here now. About 80% of India has now received monsoon rains. The Indian government’s weather expert track the monsoon’s movement, and I follow it daily.
- It’s clear that only the North-Western crop zones of India have yet to receive monsoon rainfall, and I expect that to happen over the next 14 days.
- As it becomes more evident that the upcoming harvest will be bountiful for India’s gold-obsessed farmers, banks and jewellers will loan the farmers money to buy gold for Diwali celebrations.
- Next, please click here now. After many months of sluggish action, China’s imports just surged!
- The Chinese government has recently endorsed higher deficit spending, and the citizens appear to be quickly responding with increased demand for gold.
- As love trade demand rises, any new fear trade event could cause an even more dramatic spike in the gold price than the Brexit did.
- In the current environment, institutional money managers are clearly not comfortable with “risk-on” assets like stock markets and debt-soaked fiat currencies.
- Unlike the Fed in America, the European central bank (ECB) has no European Treasury to back it in a crisis situation. That’s an upside price driver of gold of potentially gargantuan size, and the Brexit has magnified the dangers of an ECB collapse. For GDX, the $25 to $20 area is a key buying area during any pullback, and I invite the entire Western gold community to join me in that key accumulation zone, if it happens!
Jun 28, 2016
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