Commodities

Why This Gold Rally Is Different This Time

goldA couple of days ago, a Wells Fargo analyst was interviewed on CNBC and opined that Gold (GLD) could correct in price by $300 as it was part of the bear super cycle in commodities. Since I am a technical analyst as well, I checked a few charts and did my own analysis. If one looks at a one hundred year chart of gold priced in terms of inflation, they will observe a double-top formation, which has bearish implications for just about any chartist. However, as I prefer to use a multi-discipline approach to my analysis, I asked what were the underlying reasons for gold’s meteoric rise in the 1980’s and what is different or similar about today’sĀ economic conditions that could determine the probability of a bearish or bullish move in gold prices. Here is the conclusion I reached…

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