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..Many investors are unaware of the magnitude of the upleg that has begun in physical gold so the purpose of this update is to make it crystal clear why it is destined to be massive, for both fundamental and technical reasons.
The original post by Clive Maund has been edited ([ ]) amd abridged (…) by the Managing Editor of munKNEE.com for the sake of clarity and brevity to provide a faster and easier read.
With regard to the fundamental reasons why gold’s still nascent major upleg is set to be so enormous, Doug Casey has just done an excellent and timely job of setting it all out in Gold’s Next Explosive Move which relieves me of this task, freeing me up to concentrate on the technical aspects, although I may add a few observations of my own.
The Long-term Gold Chart
The first, and by far the most important point to be made, in this update is that, taking the inflation of the past decade or so into account, gold had been stuck in a gigantic trading range until as recently as the Spring of this year that dates all the way back to its 2011 peak…as can be seen on the long-term chart below…
While various commentators made a big deal of gold’s nominal new highs in 2020 and late last year, these were not new highs when inflation was taken into account – real new highs have occurred just since the Spring of this year. It is thus clear that the decisive breakout that occurred this Spring was of momentous importance as it has ushered in what promises to be gold’s most spectacular bull market to date which is hardly surprising considering:
- what is going on in the world with money creation having gone parabolic that it set to:
- drive rampant inflation trending in the direction of hyperinflation
- and attendant extreme currency devaluation
- and the proliferation of war partly as an act of desperation as a gambit to deflect the public’s attention away from the real causes of the ballooning global economic crisis which is of course the past reckless actions of Central Banks, none more so than the Federal Reserve.
In short we are looking at a perfect storm that will lead to gold doing a “moonshot”…
The 7-year Gold Chart
On the 7-year chart below we can see that the reason gold kept “hitting a wall” at $2100, which started with the 2020 peak, was that it was bumping up against the top of the giant upsloping range that we delineated on the very long-term chart, and waiting for things to get bad enough for it to break higher into the next major upleg, which it has now clearly done…[and] is starting higher again and as it advances away from the trading range, the rate of advance is likely to accelerate.
The 7-month Gold Chart
The shorter-term 7-month chart below is very useful as it helps us to appreciate that the new upleg in July, up from the consolidation into June, is now well underway with the price making new highs, but is still in its earliest stages with the parabolic uptrend shown set to slingshot gold higher.
Everything on the chart below supports continued and accelerating advance to the new highs [given]:
- the moving averages being in bullish alignment,
- the strong On-balance Volume line making new highs
- and improving momentum with the MACD showing that there is plenty of room for continued gains.
Conclusion
[Given the above analyses I am confident] investors can…buy gold and most gold-related investments with confidence.