Gold Long Term Perspective

A friend of mine sent me an email today asking me whether or not this is a good time to buy back into gold. As he’s not a trader but more of a long term investor I sent him back the following chart:

And this is the perspective I shared:

In essence the weekly shows us a retest of a ‘sell signal’ which we got about a month ago. IF gold can push above 1700 and hold then there’s a decent chance it can continue higher. IF it fails and turns back down from here then I think we go to 1400ish.

And of course a breach of 1478 on the *monthly* chart would officially trigger a long term sell signal and after an obligatory bounce near 1400 the odds would support a continuation lower toward 1000. Bear in mind that it’s that possible that we drop to 1478 and stop there, which would then be the conclusion of the weekly signal but keep the LT bullish view intact. So, the current level of 1681 (i.e. the old sell signal) actually is very important and will determine the direction for the coming weeks and potentially months.

Bottom Line: A push higher from here puts gold back into bullish mode, at least until new evidence tell us otherwise. A failure here opens the gate to quite a bit of nastiness, medium and perhaps even long term.

I leave you with this:

Have a great weekend.

Cheers,