Gold Goes 'Thunk' And It's A Good Healthy Thing

Cue Willie Nelson from back in '67 as we open straightaway with "Turn out the lights the party's over. They say that all good things must end..." Which is what Gold's 24-week parabolic Long trend just did, the nearly six-month ascent ranking third by duration since 2001. Price settled Friday at 1295 for its worst weekly drop (-2.7%) since that ending 28 November 2014 (-2.9%).THUNK!

To wit as we herein penned a week ago 

"...we have to think the "Baby Blues" [our measure of daily trend consistency] are suggestive of the precious metals getting a case of the blues such that Gold's parabolic Long trend now 24 weeks old shall likely soon fold..." 

And so it did. And it's a good thing.

"A good thing?" Absolutely right. Now pay attention. With Gold starting this past week still well up in the 1330s, we began thinking that a correction in price would be healthy as nothing ascends upward in perpetuity. We ruminated that a nice pullback toward testing the mass of underlying technical support would provide enough tightened coil to then spring price back upward beyond the most recent high of 1349 (February 20), once again giving Gold a shot at reaching Base Camp 1377. It's our sense that such process now is underway: first this "thunk" ... consolidate ... and then back up. Remember: a recapturing of 1377 with a stabilizing of price 'round there, and then it's off toward our conservative forecast high (now for the second year running) at 1434. That's why this "thunk" is a good thing. That said, the pretty picture of Gold's weekly bars instead now sports its first red dot blemish since September 7:

Too, we've emphasized in recent missives that in spite of the lengthy duration of this just-concluded run-up, it didn't cultivate the upside percentage punch that has characterized similar multi-month up moves. To wit in above graphic, the ascent was not enough to rotate the dashed regression trendline across the entirety of the chart from down to up. But if you've been keeping up to date with The Gold Update, you know that since 2001 there have only been two such up trends of longer duration, which brings us to this neat bit: the 25-week Long stint (ending December 31, 2004) was followed by only 10 weeks of parabolic Short trend before resuming upward ... and the 26-week Long stint (ending December 23, 2005) was followed by a mere three weeks of Short trend before again flipping back to Long. Given Gold's support now here in these otherwise annoying Whiny 1290's -- and in turn the thick support slab of The Box (1280-1240) -- price can gather itself together through these ensuing weeks in prepping for the next upside launch.

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