Thursday, January 4, 2018

As gold quickly rebounds back over $1320 following beatdown from FOMC minutes, long time analyst believes current rally will send it over $1400

As we have mentioned not more than a week ago, gold appears to have the 'bit in its teeth' and is shrugging off any short selling by rebounding to even greater levels within days or even hours.  And this can be seen today as gold has recovered back over $1320 just 30 hours after being slammed down to the $1308 level.


Yet with this being said, one long-time analyst believes this current gold rally is enough to push the price over $1400, which is something that couldn't be done back in 2016 due to Brexit, the Trump electionm or the Fed beginning their hiking of interest rates.

The most important piece of evidence that the next great bull market in gold has begun is the technical behavior of the prior bear market itself. 
Over many decades, commodities rallies have exhibited 50% retracements (bear markets) before resuming their long-term upward trends based on the slow, steady devaluation of the fiat currency in which the commodities are priced. 
Using the $252 price from August 1999 as a baseline and referencing the September 2011 peak price of $1,900 per ounce, gold gained $1,648 per ounce in the bull market. A 50% retracement of that 12-year rally means a decline of $824 per ounce (i.e., 50% of the $1,648-per-ounce gain), which would put gold at $1,076 per ounce. 
Guess where gold bottomed? 
It bottomed at $1,051 per ounce, within 2% of the 50% retracement target. That decline is an almost perfect technical retracement. 
Meanwhile, gold is in the early stages of a sustainable long-term bull market that will come to surpass the 1999–2011 bull market in time. 
Last month, for the third December in a row, the Fed hiked rates again after taking a “pause” on rate hikes in September. Once again, gold answered the starting gun. Gold immediately rallied from $1,240 per ounce on the afternoon of Dec. 13 to $1,258 per ounce the next day, a solid 1.5% gain in one day. 
If gold follows the pattern of the last two December rate hikes, this new rally could go to $1,475 or higher by next summer. That would be a 20% rally in six months, roughly comparable to the rallies after the December 2015 and December 2016 rate hikes. – The Daily Reckoning

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