Still Stuck in a Wedge

Another month has passed, and gold is still stuck in its wedge formation. A measly one percent gain for the month pales in comparison to other assets, such as Bitcoin and tech stocks. However, there are a few things worth noting for those in search of something positive to say about gold's medium term prospects.

• The August 9 attempt to break out of the formation to the downside failed, and has not been attempted again.
• Pressure remains mainly to the upside, with multiple attempts having been made since August.
• Search interest for gold has increased, and is now at a multiyear high.

Retail interest in gold is presumably behind the upswing in search interest. If so, physical demand is likely on its way up, and this is exactly what we need in order to push the price higher. Unlike ETFs and future contracts, which can be manipulated by central banks and other entities with unlimited access to cash, physical gold is hard to find. There's only 20 grams of it per person on the planet, and central banks, together with their affiliated bullion banks, are only in control of a small portion of this.

If average middle class families start putting some of their saving in gold as was the norm in the olden days, gold will break out in a big way, to the benefit of prudent savers and to the detriment of central banks, bullion banks and other gold manipulators.

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