For the first time in 4 years the price of gold (and silver) are actually in the process for a sustaining bottom. There are clear sings the bear trend in precious metal is coming to an end. This could be the start gold stocks are waiting for to outperform the markets.
Gold completed a small compound bottom and an 11-week cup and handle pattern. Since 2011 only on a few occasions, gold experienced a significant bottom formation on a single daily chart. What we saw at the end of last year and in the beginning of 2016 was the first since 2013.
This is good news given Gold’s sustained bear trend. If the yellow precious metal can hold on to this rally, on the short-term a $1,180 – $1,190 rally will be no surprise. That’s a more than $100 gain or a plus 12% increase in a few weeks.
(chart courtesy to Peter L. Brandt)
The same thing applies to silver. There wasn’t a successful daily chart bottom in several years. The chart now exhibits a possible H&S bottom — with two heads and an abbreviated right shoulder. On the short-term a $15,59 rally will be no surprise either. That’s an incredible $1,80 move or a plus 13% increase in a few weeks.
(chart courtesy to Peter L. Brandt)
Gold and silver traditionally do well at the beginning of a new year. But this year seems somehow different. The stock market peddles in the dust while the two majors precious metals are in the process of a permanent bottom formation, not seen in the other short-term rallies we saw earlier.
It isn’t a reversal yet. Bulls are awake but the burden of proof rest with persistence. Gold remains in a long-term downward channel. This rally indicates more the start of building a permanent bottom than the start of a new bull market.
Federal Reserve can’t keep it’s promise
But things a looking brighter each day. Last week a global slowdown and a lower than expected job report has increased speculation that U.S. growth will cool enough to force the Federal Reserve to wait longer before raising interest rates again. The chance we see another increase this year nose-dived to less than 50%.
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