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How gold is setting up for its next big move

Jeff Clark
8 Comments|July 25, 2014

In May, I told you the next gold rally had just kicked off.
 
However, since my essay, gold has gone nowhere. The metal is only up around 2%. For comparison, the S&P 500 is up around 5% in the same timeframe.
 
But that's about to change. Gold is setting up for a big move higher...
 
Take a look at this chart of gold...
 


Gold is trading above both its 50- and 200-day moving averages (DMAs). These lines should provide support and limit any downside action in the metal in the short-term.
 
The metal's next significant resistance level is up around $1,380. That's about a 5% gain from today's gold price. But gold is setting up for a much larger move...

The chart has developed a long-term inverse "head and shoulders" pattern.
 
The left shoulder forms when an asset hits a low point and then rallies. The head is made when the asset drops to a lower low and then rallies back to its previous high. The right shoulder forms when the asset drops back down and makes a higher low.
 
This is how bear markets change into bull markets.
 
If gold can rally above the "neckline" of the pattern at about $1,380, the projected target is up around $1,600 per ounce.
 
In the next week or two, gold may pull back and test its 50- and 200-DMAs. But the long-term picture for gold is still bullish. Traders should use these pullbacks as opportunities to buy. It looks like the metal is headed much higher.
 
Tags: GOLD

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Comments

CountOfMeltedCrisco
Oh, and Jeff? NO serious technicians use the 50 and 200 DMA's any more. Why? Because every dope in the world ( I guess that includes you, then ) is using those two now. So the REAL, NEW numbers are now something else. They're not simple moving averages, either. Guess you'll just have to figure them out for yourself. Maybe. Good luck.
2 stars
July 25, 2014
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benduck
Not being a bonefide chartist; what creates or defines the target of $1600? Secondly, how reliable is that target? TIA.
2.5 stars
July 25, 2014
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Nosleep
so give us your chart analysis and target breakdowns for the next 6 months count, lets see what plays out ;-0. You shouldn't listen to anyone but yourself at any point, when investing, so if people want to throw away hard earned money taking advice from someone, so be it. Everyone should have rules in place when investing, any significant losses are their own fault. Don't blame a letter writer.
4.5 stars
July 27, 2014
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ruben12345
Charts or no charts ..I've been following Gold and its supporters for 12 months now. They all know nothing, incl Sprott, Rick rule, Casey...it is embarrassing to see how often they correct themselves. They've got no clue and are waiting to see what happens next.
1.5 stars
July 28, 2014
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Adahondeayenh
That's a very interesting theory, I'm hoping something comes of it. Fundamentally, I'm still bullish on gold even though the markets seem to be beating it down constantly. Gold definitely saw a well-formed cup and handle in late-May / June of this year and that lead to its last small rally.
4.5 stars
July 25, 2014
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Dickles
I'm still bullish on gold but the problem is that the charts lie, especially when the price is being manipulated. There is far too much paper gold out there and its allowed to be out there. You can't cash in paper gold. If and when that changes, if it ever will... Gold will fly. But only when the powers that be decide to let it. Sorry. 'What should be' and 'what is' unfortunately are two different things. GLTA And Crisco, take a chill pill, you sound like you&#...
4.5 stars
July 26, 2014
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CountOfMeltedCrisco
What "creates or defines the target of $1600" is Jeff's over-wrought imagination. That, and the need to sucker people into throwing their hard-earned money away on his PuppetMeister Doug Casey's hot-air rants.
2 stars
July 25, 2014
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thebaker
Dickles, you can cash in paper gold, just not for gold. The reason it is possible to manipulate gold is the fact that people are allowed to sell this "gold", which they do not really have. Just about the same as the "gold" the US is "holding" for Germany.
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July 28, 2014
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