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Gold Tests Resistance – Again. Will The Sixth Time Be The Charm?

Here we go again. After a couple of big trading sessions, gold – for the sixth time in five years – is approaching the $1,350-ish level that has, each previous time, stopped it cold.

gold price gold resistance

It looks like fundamentals, including the Fed’s capitulation to choppy stock markets and trade-war related economic uncertainties, are trumping gold’s usual seasonality (strong in spring, weak in summer) at the moment. And those issues aren’t abating: Recent headlines paint a picture of an increasingly scary world:

Beijing warns US farmers may lose China market for good

Millennial net wealth collapses, study finds

Global manufacturing shrinks amid Wall Street recession warning

Yield curve expert with perfect record sees recession risk growing

There’s a lot more out there, but these four headlines are enough to convey the variety of dark clouds now combining into a perfect storm that has, among other things, spooked the Fed into openly discussing the next round of monetary experimentation. Just this week, Fed chairman Jerome Powell gave a version of ECB chair Mario Draghi’s famous “whatever it takes” speech in which he looked forward to exploring the “effective lower bound” (ELB), the point below which interest rates just can’t go. To have the central bank validating such an experiment – which, since we’ve never been there before, will have to be discovered by trial and error, the error being financial disruptions when rates get too low – is both unprecedented and a sign of how far out of control today’s monetary policy has spun. The markets seem to get this. Hence the pop in safe-haven assets like gold.

Here’s an observation from gold analyst Stewart Thompson:

SPDR (GLD-NYSE) tonnage surged to the 159 level yesterday. This is clear evidence that US money managers are also going for the gold! Chinese investors are reporting buying additional gold because they believe Trump cannot be trusted in negotiations.

I predicted that Chinese investors would begin buying gold instead of investing in stock markets as the trust issue reared its ugly head, and now it’s happening. The bottom line: It really doesn’t matter whether Trump can be trusted or not.

What matters is what US and Chinese investors believe, and they clearly believe that it’s time to go for the gold!

And one from commodities specialist Rick Mills:

The lives of gold mines have become so short, it takes longer to discover one and put it into production than the time from the onset of mining to closure.

Combine these supply factors with the demand-side reasons for owning gold right now. To recap, they include the series of economic indicators showing that US growth is grinding to a halt; worsening yield curve inversion; a potential trade spat with Europe waiting in the wings, as the US-China trade war appears no closer to a resolution; and the increasing tension between China and the US over Taiwan and the South China Sea, raising the possibility of war and a flight to safe havens like gold, and you have all the makings of a powerful and prolonged bull market for gold just as we are entering the most active time of the year for junior resource companies.

With all that is going on in the world, we believe the gold price will do well over the next few months

So will the sixth assault on $1,350 be the charm? And what happens when gold finally blows through this long-term resistance? That’s impossible to say, of course. But here’s hoping that old resistance becomes support and new resistance doesn’t form until somewhere in the $1,500s.

 

Emigrate While You Still Can

8 thoughts on "Gold Tests Resistance – Again. Will The Sixth Time Be The Charm?"

  1. No, no, no. Sell all your gold and silver. The price is not going above $1350. Keep dreaming. It’s going to crash. Ask Harry Dent, he will make a fool of all of you! (P.S. I ran out of fiat to convert to silver, if you can please keep it down until I reload?)

  2. One good thing about Bitcoin is that it may get a lot of attention, and advertised as a safe-haven alternative currency “even better than gold.” That could take the pressure off of gold. If control of mass perceptions is the game then the hoi polloi will definitely be impressed if Bitcoin continues to rise, especially if it rises quickly. If Bitcoin is believed to be an actual alternative currency then the “authorities” will have to naked short Bitcoin too. On the other hand, if it’s given short shrift as just a speculative fad then maybe not. But that would undermine the cause and efforts of pro-Bitcoin enthusiasts because it would diminish its acceptance for payment.

    Personally, I’d like to see to see naked shorting of Bitcoin attempted because it would surely be balked about as an “absurdity” and an affront to everything cryptos stand for, which would also help free gold. With the big exchanges getting involved in Bitcoin trading the mechanism for that is baked in. It’s not a question of whether that would be legal because naked short regulations haven’t been enforced for years. Gold is not the only victim of that.

    If the DOW manages to get up above 26,000 again I doubt gold will break $1350.

  3. ” … gold – for the sixth time in five years – is approaching the $1,350-ish level that has, each previous time, stopped it cold”

    Yeah, I see the chart, but a line of a screen doesn’t stop a rally. The players in the market do, and I’m not talkin’ about producers / hedgers on one side and users / fabricators on the other. I’m talkin’ commercials … bankers / speculators … on one side and trend-following hedge fund whippets / speculators on the other. The latter are dopes … the pigeons in this con.

    What has stopped gold cold is manipulation of the market by JPMorgan and three or four other banksters.

    They draw a line in the sand and sell naked short when it hits that line. In this case, it’s 1350. Price reverses. Do that 5 times and it looks as if there’s some market-based significance to “resistance” at 1350 … and so people who still believe chart analysis yields much of anything in the way of useful information in a rigged market dutifully buy into the resistance meme and “play the breakout or stand back if the price sinks.

    JPM et al will allow some head fake breakouts to suck the gullible in, but usually, they just do their thing at 2 am and put the boot back on the neck of the market when it hits the target and down we go. Is this not glaringly obvious to anyone who’s been paying attention?

    As long at the bullion banksters are able to maintain this kind of control, gold will do what THEY want … and the squiggles on a chart will continue to mislead those who think they’re dealing with a free and fair market governed by actual rules upheld by actual regulators.

    If you believe that, you probably believe banking, as practiced by the big 6 mega banks and the big global banks, is an honest profession.

    1. Excellent analysis Thomas thank you and I am with you 100%. I have studied this manipulation for years now and they don’t even try to cover it up anymore. Just goes to show the depths of corruption to which this whole global system has been driven. Only when the dollar is lost will the curtain be unwillingly drawn and we will all see that the wizard has no clothes.

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  4. With the debt building up by the Feds, the state unfunded retirement plans, and the Fed Reserve printing/digitizing money out of thin air, the day of reckoning is at hand.

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