Before the advent of central bank intervention into the markets, most investors relied upon fundamentals and technical analysis when researching the future of a company stock, or the potential growth in resource commodities. And while past history does not always guarantee future trends, the likelihood of certain benchmarks being crossed places the probability of such moves in the 75-95% range.
This week, technical analysis for gold reached one of those historical milestones, and in all past bull markets for the metal, the upside once reaching that benchmark has always been between 40 and 412%.
Strategically, it’s been even longer since we updated our longer-term framework for gold. In fact, it’s been three months since we did that in this post. In that May piece we suggested the metal continued to track favorably vs. our bullish expectations, but in the near-term it faced a major test having rallied nearly +25% off its Dec-15 low, a historical demarcation point whereby cyclical retracement rallies were either snuffed out with a resumption of a secular bear beginning afresh, or, the same moves continued higher, indicative of a new secular bull being underway.
Where do we now stand vs. that +25% demarcation point?
As of month-end today, gold is up over 27% from its Dec-15 lows.
This a major milestone – any time gold has managed a move of at least 25% off a major low, it has continued higher every single time with incremental gains ranging from 21%-412%, with the average totaling 175%. - Only Prices Matter