Last Friday we said gold might finally have it's real breakout here [Jan 23: Could be the Real Breakout in Gold] I wrote
Things to like
1) a series of higher lows
2) the trendline of lower highs has been penetrated
Things to see for confirmation
1) any pullback is bought
2) price prints over October 2008's highs, signaling the end of "lower highs"
This was what the chart looked like at the time
Now?
Without benefit of the orange line - you can see condition #1 has been fulfilled - we "backfilled", tested the area we broke out of and people were eager to buy. On that, an aggressive trader would be buying. A reader mentioned this outcome yesterday.
For someone more conservative in orientation you want to see #2 "a price point over October 2008's highs" - then we end our half year of lower highs. We are withing spitting distance here with GLD @ $91.40 and the October intraday high at $92.
It's hard to get behind gold fully because there is no "earnings" behind it; it's all about sentiment. But the theory is as all the world's troubled countries race to devalue their currencies (print print print) to "save the system", a hard asset should retain it's value. Silver is likewise breakout out - although silver has a lot of industrial uses as well.
I hate to chase a move but from a technical set up, a lot of institutional money could be set to finally jump in here....
Now the question of what instrument to use - keep it simple or go with a miner, etc.
No position
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