There are traders and there are investors. This article is not for traders, as trading requires particular methodologies. We try to explain in this article at which price levels gold investors should start worry. We do so based on basic chart analysis.
It is a common misunderstanding from gold bulls to deny charts arguing there is manipulation. We do not disagree there is manipulation in today’s precious metals market. We have even documented it in great detail (for instance here and here).
On the other hand, it is not possible to get a view on a market or an asset “excluding” manipulation; in other words, there is no way to “filter out” manipulation and see what that market or asset looks like. That is why we believe charts still provide the best pieces of information to get an understanding of trends, both long and mid term (the short term charts, however, are for traders).
Below is the long term chart of gold. It is the weekly chart since 2004, the year in which the uptrend started to accelerate. Charts contain a lot of information, but it is mandatory to know how to read charts.
Gold’s “ab” upleg pattern is clearly visible in the chart. The billion dollar question is what the “bc” leg will be. In that context, which price points are potential candidates for a point “c” in the abcd pattern? Those price points are indicated with red circles, i.e.
In other words, even if gold would go as low as $700, gold bulls should not be concerned. It becomes very unpleasant for gold bulls when gold would structurally dive below $700. For now, however, the price points indicated above $1,000 should be of a primary concern.
Taki Tsaklanos – GoldSilverWorlds
Precious Metals Contributor – Future Money Trends