2018 Gold Price Forecast – A Major Bottom is Forming

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Gold is now completing a pattern which repeats over and over again throughout history. The pattern suggests that a critical low is forming, and that the price of gold is set to begin a new primary advancing trend in 2018.

Note that we are not anticipating skyrocketing prices – such is the realm of headline hyperbole. Further, at this firm we have not been bullish on precious metals from 2011 through 2015. Regular readers will know that no bullish articles were published by this firm during that period: we were waiting for the proper technical signals to align which showed that the declines after 2011 had concluded.

Those signals are now visible. A new advancing trend in gold will set the stage for a markedly different backdrop which will impact short-term traders, investors, and mining companies alike. We must pay attention to these signals as they emerge now and before they are widely-known to avoid chasing markets higher – a strategy which usually results in severe losses.

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US Dollar, Gold, and Euro Update

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The US dollar is on the edge of a decline that may take many by surprise throughout 2018 and 2019. Conversely, gold, the euro and many non-dollar assets stand to benefit. Certain segments of the US stock market may hold up in a falling dollar environment, especially those which can raise prices to compensate. Yet to use the skydiving analogy: the time to buy a parachute for protection is before the falling begins. As usual, we will focus here primarily on technical analysis, and endeavor to avoid the fundamental-only rhetoric that is so often misleading at exactly the most crucial turning points.

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Gold Price Forecast – First Breakout Signal Since 2008

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As President Trump prepares to nominate a new chair for the Federal Reserve this week, gold prices remain in a range bound consolidation. Not only has this grinding pattern been ongoing for the last several weeks, but when we examine the price chart for the last five years, we see that gold has essentially been flat as a net sum dating back to mid-2013. And indeed, to the mainstream investor who is primarily involved in a stock market now at all-time highs, gold appears of little interest at the present moment:

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Watch the Gold / Yen Correlation

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Both gold and Japanese yen have acted as the same asset class for practical purposes since 2011. However, early signals show gold beginning to outpace yen. Investors should not underestimate the impact that a more significant breakdown in this ratio will have on gold prices. We expect a major gold advance to coincide with a break of the lower boundary of the correlation.

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Gold Prices: Record-Breaking Volume

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It is often said that in market analysis: “volume precedes price movement.”

Gold has just posted its highest quarterly volume of all-time for futures trading history, for the quarter ended September 30. The closing data shows that for the period, over 17.5 million contracts traded hands. This eclipsed the previous record volume by a whopping 3.5 million contracts. What’s more, the new record surpasses the number of contracts that were traded during the quarter in which gold made its all-time price high of $1,923 per ounce, which came in Q3 of 2011.

Something is happening here in the gold market, for those who would pay attention to the hints now presenting themselves.

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