The Golden Ticket
We continue to like gold and believe it will make a new all-time high above its Aug 2020 peak of 1862.85. Any consolidations or pullbacks should be bought. The metal’s improving price action in US$ is joined by improving price action for it across the other eight currencies below. It won’t be hard to notice the BASEs in each of the nine charts, however. Gold in ¥, which has broken out of its BASE aggressively is ahead of the others, is a bit more than 2% from a new all-time high. As of this morning, XAUCAD, XAUBRL, XAUMXN, and XAUSDG are also breaking out. Laggards will follow suit.
Here’s a monthly chart for gold ($) with its 12-month moving average. You’ll see quickly that the pattern for gold is some combination of a 10+ year Brobdingnagian BASE TM / 10+ year “cup and handle” formation. Regular readers (thank you) will recall that the BASE set up is our raison d’etre. We believe that BASING action is the building of a fundamental story that becomes evident when the BASE is completed via a breakout.
William O’Neil coined / identified the “cup and handle” pattern. He believed that the “cup and handle” was a continuation pattern – i.e., that the trend in place prior to the “cup and handle” will continue upon its completion.
We’ve all heard the trope that “bitcoin has taken over for gold…” which might be true. But, even if it is true, that doesn’t mean that (a) gold can’t rally – and it is – and (b) that gold could have a run of outperformance vs. bitcoin. The chart below shows gold and bitcoin (top panel) and gold / bitcoin in the lower panel.
A case can be made right here that bitcoin is in for a corrective phase as the most recent new high was unconfirmed by daily and weekly momentum (i.e., negative divergences) indicators. Too, as the bottom panel shows, it might be that gold has found support relative to bitcoin.
Here’s our list of preferred gold and silver stocks via our Technical Scoring system.
