An In-Depth Look At Gold

Gold plays a dual role as a commodity and as a monetary metal which makes it important to keep a close eye on. During the early stages of a commodity bull market Gold will generally lead the whole complex higher. When the troops see the General leading they will feel more emboldened to have their turn at a bull market. We’ve seen this scenario playing out since the Spring of this year where most of the important commodities have bottomed out and are beginning their new respective bull markets. Gold actually bottomed in late  December of 2015 while commodities continued in their bear markets into the Spring of 2020.

As a monetary metal, some investors like to use Gold as a safe way to store wealth or as a hedge against inflation. Other investors like to have Gold in their portfolio in case the stock markets crash and the economy goes into a deep tailspin and never recovers again. One thing we do know is that Gold will always have a monetary value and not go to zero which is possible with an individual stock.

In this in-depth look at Gold, we’ll look at it from the daily to quarterly charts, in bar and line charts, and ratio combo charts which will paint the history for gold starting from the 1970s to the present. When you finish reading this post you should have a strong understanding of where Gold has been and where it is likely to go based on the Chartology. There are no absolutes when it comes to the markets, but as we know history never repeats exactly the same but can rhyme to a certain degree.

Let’s start with a daily chart for Gold and then work our way out to the longer term charts and try to put all the pieces of the puzzle together to form a working scenario we can use to help guide us going forward. Without a game plan or working scenario one is left to the emotional destruction, from a psychological perspective, that ruins most investors that don’t have a true understanding of how markets work.

This first daily chart for Gold begins with the 2020 crash low that occurred on March 23rd of this year. In order to end a downtrend, there is generally some type of reversal pattern that may seem obscured initially but may stick out like a sore thumb after some time has elapsed. Gold formed a small double bottom at the March  23rd low which reversed that hard move down. Once Gold traded above the double bottom trendline that was the first sign that Gold may be getting ready for a move to the upside. On April 2nd Gold backtested the double bottom trendline from above which put the new bottom in play as long as the backtest held support. As you can see Gold built that small blue bull flag as the backtest which worked like a halfway pattern. After the breakout from the top rail of the blue flag, Gold impulsed higher until it ran out of gas and needed to consolidate its gains by forming the blue triangle halfway pattern which was truly a halfway pattern as shown by the blue arrows.

After completing the blue 2-month triangle HP the second impulse move of the new bull market reached it price objective up around the 2090 area where it was time to consolidate those gains starting at the August 7th high. From that August 7th high to the present, investors with no game plan or a way to visualize the price action either from an Elliot Wave, Cycles or in our case Chartology, are left totally in the dark with only their emotions to guide them. I know for some of our new members this is the first time you have ever understood what it means to live through a consolidation phase in real-time which are meant to shake you off the bull.

There was no way to know what type of consolidation pattern would form off the August 7th high only that the odds were high that we would see some type of consolidation pattern build-out in time and price. I’ve mentioned many times to you that there are easy consolidation patterns such as a triangle or a bullish rising wedge or rising flag which don’t have a lower low.  Then there are harder consolidation patterns that can be much harder to deal with such as a bull flag which sounds easy but you have to hold on when the stock is making lower highs and lower lows which can be hard on your emotions. It’s a great consolidation pattern when it is finished but can be hell for many investors that don’t understand what is taking place.

For those that are new to Chartology, you have just lived through one of the tougher consolidation patterns to deal with which is still not complete yet but getting closer. The reason the August bull flag is getting close to completing is that we are seeing a H&S bottom forming at the 4th reversal point. If the H&S bottom plays out it has a price objective up to the 1987 area which is way above the top rail of the August bull flag. Now we wait and see what the price action has to say about our bullish scenario.

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