The German team stick to their guns that the short term moves lower at the end of 2012 have not ended the secular bull trend in the bullion. Therefore Gold 1625 and Silver 29.1 should mark the bottom of the recent weakness allowing the short and medium term uptrend to resume.
Pattern wise we have formed large wedges in both the bullion metals here. These classic price patterns usually indicate a fast momentum breakout in one direction or another is close at hand. The pattern should be resolved, one way or another, in the 4 weeks or so. Volatility should inevitably come back to the asset class due to resolution of this large pattern.
The cyclical bear within the secular bull has lasted now between 18 months (gold) and 20 months (silver). As we look across asset classes there is much to support the secular bull continuation here. I.E. Copper and her miners based and scoring price breakout patterns, Audusd pair showing much support, secular bull alive and well. Shanghai based and in medium term breakout. CRB in medium term breakout. Oil in medium term breakout. Cyclical stocks in breakouts, finance sector, brokers, sox, manufacturing, chemicals, etc, etc.
FX wise, supporting weakness of the US$ would assist. As we look at the major pairs vs the US$ we can see the USDJPY has come a long way and is now close to resistance and is very over bought. The EURUSD is caught in a range but has support and is threatening a breakout much like the GBP vs US$. We have the US debt ceiling issues which could weaken the US$ given a sustaining global growth story. The AUD and CAD are showing technical strength and look close to breakout if after a little consolidation phase to work off the over bought conditions.
Fixed income is weak and flows are shifting from the asset class. This is good for bullion & equities alike, in my view so long as US$ sees more weakness and the cyclical reflation trend persists.
Overall, its a fairly compelling (high prob) case that the cyclical bear in the bullion is close to capitulation and therefore that the recent weakness is a classic false final move to force out weak hands before a high volatility breakout of the cyclical bear takes hold and the secular trend resumes.
Without delay here the report:
Best regards to all
Rich
(8 votes, average: 5.00 out of 5)
Loading...