Monday, 5:07 pm EST. Hey, I can post this, and then comment below…
|“Bullish on Gold? You Need to See This Chart|
Monday, April 17, 2017
| Gold covered a lot of ground over the past couple of weeks…
First, President Trump launched a missile attack on a Syrian airbase. Then, the U.S. military bombed an ISIS target in Afghanistan. All the while, we’ve been hearing about possible nuclear weapons tests in North Korea… and what that might mean.
Global tensions are high.
On top of that, Trump commented that the U.S. dollar is “too strong.” And the first round of the French presidential election – which could ultimately lead to France leaving the European Union – is set for this Sunday.
Investors are feeling uncertain.
Lots of people see gold and silver as “safe havens”… assets that will retain their value during periods of uncertainty. Because folks don’t know how else to safeguard their wealth during these times, they store it in the form of physical gold and silver.
If you’ve been reading _____for long, you know this… So you shouldn’t be surprised to see the precious metals trading at new highs for the year. But you might be thinking, “With all this stuff going on, doesn’t it make sense to load up now?”
Today, we’ll examine that question… I’ll show you why now is an especially risky time to make bullish bets in precious metals.
We last looked at gold, silver, and precious metals stocks on April 5. At the time, I noted that all of these assets were bumping up against short-term “resistance” levels, except for silver, which had already broken through. (Resistance is a level at which folks tend to sell an asset and prices often stop rising. If an asset breaks through resistance, it will often continue to rise.)
I won’t go through all the charts again today. But if you look at an updated chart for each asset, you’ll see that they have all broken through their resistance levels since that issue. It’s a bullish sign.
But the most important chart of all – the long-term chart of gold – still hasn’t given us the “all clear”…
On April 5, gold traded at around $1,250 per ounce. On Thursday, it closed at $1,288 per ounce – a 3% gain. That’s a lot of ground for gold to cover in just seven trading days. And as you can see in the chart below, gold is now “bumping its head” against its long-term, downtrending resistance…
If you’re holding bullish trades in gold, gold stocks, silver, or silver stocks, you’ve likely had a good couple of weeks. But I do not suggest placing new bullish trades today. These assets all tend to follow gold. That’s why, a couple of weeks ago, I said…
The way I see it, on the downside, gold could pull back to $1,200 per ounce or maybe lower. That’s at least a 7% drop for the metal… And it would likely mean much more downside for silver and precious metals stocks. Yet the upside you would gain by jumping in now is small…
Sure… You may miss out on the first move higher as gold breaks through resistance. But that initial move likely won’t exceed 4%. That’s not worth risking 7% or more on the downside.
For a trade to be great, you need two things… First, you need a good idea. And second, you need a trade setup that allows you to limit your risk.
With everything going on in the world, owning physical gold and silver is a great idea. Even speculating in precious metals stocks is a good idea… when you have favorable trade setups.
We’re not there yet. But we’re close.
Hold on to the trades you have open. And hold off on opening new ones. Your patience will likely pay off.”
To all of which, I can add this: Having the timer back up and running, the OEXpert 7 says that all 7 indicators within it were registering that gold had gotten to where, having risen since the mid-March lows, risk was measuring HIGH! So, to the above comments, I can wholeheartedly concur.