Thin blue line

*UPDATE: refreshed the chart to capture today's action.

This weekly gold chart (since January 2009) is pretty striking. The black channel does a good job capturing weekly closes. We just hit the bottom of the channel, so if we're headed now to the top, that would signify $1650 gold. However, on more than a few occasions in the past, it looked like gold had bounced off the bottom of the channel, only to retest it again.

I've drawn a thin blue line: note that when gold has closed the week over that line, it has pretty much always gone on to hit the top of the channel. Well, currently that would require a close of $1590 or so. Let's see if that happens this week or next. If not, we may retest support.

Note: I'm going to busy for the next few months with grad school exams and stuff, but I'll at least try to update some of the charts we've been discussing. E.g. I'll post updated long term silver charts by the end of the week.


Robert LeRoy Parker said...

Where's the top of the channel?

GM Jenkins said...

Hey RLP, my pt was that on this 3 yr chart, gold has made its way to the top black line (or higher) whenever it has closed the week above the blue line.

Robert LeRoy Parker said...

So if the pattern holds, it should rise at least $50 further, but maybe as much as a few hundred based on past jumps.

Wish I had enough confidence to take some leverage but I don't. Physical will have to do.

GM Jenkins said...

Heh, yeah - I've been all in for the past few weeks, but no margin or options. If gold tests the lower black line again though ... I just might get more aggressive.

Re: physical: i think a lot of people want to "eventually" convert to physical, but someone should do a paper gold analysis factoring in taxes on profits (including potential for an increase) and potentially rising premiums if and when the shit hits the fan. I think you need a significantly bigger profit in paper to equal your appreciation in physical than many people likely realize. Jimmy Rogers is big into just holding the commodity, and that probably has something to do with it.