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Forbe's Analysis: How Gold's Uptrend is Still Intact

Commodity Investment
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EDITOR NOTE: The most ‘deceptive’ thing about following financial news on a regular basis is that, ironically, it keeps you ‘informed.’ It puts relevant and timely information right in front of you, offering you the latest opinions, market movements, and developments, often in the blink of an eye. And that’s what’s so deceptive about it. For everything displayed for you to see, there’s more that’s concealed; for everything posited, more is erased; for every critical insight it offers, it comes with critical blindness. And in the gold market, the most relevant insights and opportunities come not to those who ‘see too much and too quickly,’ but to those who can see better. From a near-term perspective, gold’s recovering from a pullback dating back to August 2020. On a price chart, the price action doesn’t bolster much confidence--that is, until you look at gold’s uptrend going back to 2016, or even further, to 2001. Regardless, price action will only tell you so much. The real story is far from exciting: it’s to be found in the way central banks across the globe are gorging on debt, how the global economy is in constant need of a stimulus fix, and how paper money is rapidly experiencing what can only be described as an inevitable debasement. Those stories may not be the most ‘timely’ narratives, but that’s because they’ve remained static, constant, unchanged. So too has the dollar’s steady debasement, and gold’s and silver’s steady and long-term rise.

After a brief surge over $2,000 per ounce last summer, gold has been a lackluster performer in the past year - especially when compared to cryptocurrencies and technology stocks. The yellow metal is down approximately 15% since its peak in August 2020, when the coronavirus pandemic was still raging. Despite its disappointing performance in the past year, basic technical analysis shows that gold’s long-term trend is still up.

First off, here is the daily chart of gold over the past year:

Though gold’s daily chart doesn’t show much of a discernible trend, the weekly chart is helpful for identifying longer-term trends. According to this chart, gold’s uptrend that began in early-2019 is still intact because the metal remains above the uptrend line that formed at that time. Gold’s weak, choppy performance over the past year has created a consolidation pattern that could have bullish implications if the metal is able to stage a convincing breakout above the pattern. Of course, it is important to beware if gold breaks below its consolidation pattern and uptrend line, which would be a bearish sign.


Original post from Forbes

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