I’m starting to see investors panic and turn bearish on gold as prices drop below $ 1750. That tells me that we could be approaching a selling climax and a major downside. The overall picture for gold remains decisively bullish and points to higher prices in the years ahead.
GREAT GOLD PICTURE UPDATE
GOLD MONTHLY TRENDS TABLE: I like to turn to the monthly gold chart to get an overview. If you look at the overhead indicator, you will see that this is the first monthly stochastic drop below 80 in a new bull market. We had a similar setup in 2003 when gold fell to $ 320, which turned out to be an excellent buying opportunity. I think the same is true now.
The 20-month average (pink line above): In bull markets, gold prices should stay above the 20-month rising average (currently $ 1700). The only exception is when prices drop to an 8-year low (like 2008). Note: The next 8-year low does not expire until 2024.
GOLD PRICES AFTER SEPTEMBER 2001: After the initial shock of the 911 attack, gold prices fell back to pre-9/11 levels ($ 270) a few months later. It turned out to be a great opportunity. I see the same setup now that gold is approaching pre-Covid levels.
GOLD NOW: I think we could be close to a bottom in gold. Prices could go lower in the next few days if the stock market sells, but I think it would be temporary. If we look back five years from now, I think we will see today’s prices as an incredible long-term opportunity.
In short, Covid-19 was a fundamental turning point around the world. There is much more money in circulation but the same amount of gold. Just like there was a brief opportunity to buy gold at pre 9/11 prices a few months after the event, investors are getting a similar opportunity in gold now, in my opinion.
I think now is the time to be greedy when others are afraid.
AG Thorson is a registered CMT and expert in technical analysis. He believes we are in the final stages of a global debt supercycle. For more information, please visit here.
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