A Good Week for Gold

There's a saying that what doesn't kill us makes us stronger, and this saying seems appropriate for gold this week. Whoever decided to dump $4 billion in gold futures on Sunday evening didn't get much bang for their bucks. Gold has ended the week higher, not lower as the manipulators must have hoped for. Making things worse for them, they now have a bullish weekly candle to contend with in the gold chart.

The candle is green, it has a long unfilled tail pointing down, and a short filled top. Scrutinizing the gold chart for similar weekly candles, we find one at the end of March and another one mid June last year. They were followed by moves up of about 10 and 15% respectively. If we get a repeat of this, we'll break out to the upside of the wedge pattern described in my previous post on gold.

Gold looks strong from a technical perspective, and fundamentals could hardly be better. Confidence in the current world order is evaporating. The US military has been defeated by the Taliban in Afghanistan, US military personnel is being injected with an experimental vaccine, and China is closing ports that export goods to the US. There's hysteria and madness everywhere. With history as our guide, we can predict that gold is going to do well in the months and years to come.

Rococo Cup with handle

By Vincennes Porcelain (France, circa 1739–1756), Francois Binet (France, active 1750-1775, born 1731) - Image: http://collections.lacma.org/sites/default/files/remote_images/piction/ma-31852871-O3.jpg Gallery: http://collections.lacma.org/node/229367 archive copy, Public Domain, Link