Gold Chart

Gold Clearly Reverses at Consolidation’s Upper Border

At the same time, when the gold to silver ratio was breaking out in a clear way, many journalists ignored that and emphasized the importance of the resistance at hand. Either way, the focus was not on what was really going on, but on trying to make the reality fit the bullish case for gold. After all, “gold people” have to be bullish on gold all the time, right? Wrong – those, who want their clients to succeed need to stay focused on what is likely to happen based on objective, cold logic, and facts, instead of chasing the emotions of the day. And what do the facts tell us?

We have a twofold purpose in highlighting the pitfalls of permabullish emotionality. The first one is to show you how acting on emotions in investing backfires – gold rallied temporarily above $1,440 and in today’s pre-market trading, declined to almost $1,400. And it doesn’t seem that the decline is over. The second one is that we want to emphasize that there is almost nobody else in the gold analysis business that saw that the real resistance and the upper border of the long-term consolidation pattern in gold is at the mid-2013 highs. Many others cheered as gold moved above the previous – less important – highs, and they wrote about a major breakout in gold. These were breakouts, but not the key ones and nothing to call home about given that the highest of the relatively close highs remained unbroken. Please remember the above as gold moves to lower prices. Please also remember that we are writing right now that we will see gold below $1,200 well before we’ll see it above $1,500.

Let’s see what happened on the precious metals market, starting with something… beautiful.

Marvelous Fractal Lessons

Do you remember how gold topped in 2011? Do you recall its immediate and sharp decline followed by a correction that hasn’t made it to the previous high, and then – after a few months of pausing – making a final attempt to move higher but failing to break above the most recent high? And then, in April 2013, it truly plunged, which was immediately followed by a sharp correction and then the slide continued to new lows?

If you’ve been interested in the precious metals market at that time, you definitely remember – it was impossible to miss these moves.

The beautiful thing here is that… The above chart doesn’t feature it. These are not weekly or monthly candlesticks. These are 30-minute candlesticks and what you see above is what gold did in the last two days or so. You probably thought that it was gold’s performance from 2013, because the price pattern is almost identical. Please take a look below for details.