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Gold’s Power Play

Comex Gold blew past $800 with such winning ease on Friday that perhaps it’s not too early to start thinking of the supposed barrier as support rather than resistance. We wouldn’t want any cockiness on our part to jinx the next thrust, to an expected $907, but gold bugs have reason to be optimistic that this threshold will soon be reached for the first time in history.

From a technical standpoint, a rally to at least 907.30  became an odds-on bet when the Comex December contract pushed past 768.90 in mid-October. We had written as follows, with Gold trading in the mid-$700s:  “[768.90 is our minimum objective] for the next two weeks, but an even more important target at 907.30 would come into play if it is easily breached.”

As it happened, the Decembers pushed decisively past 768.90 a mere week after first encountering it. From a Hidden Pivot perspective, this not only clinched the push to at least 907.30, it also hinted that that number will be reached relatively quickly. Of course, Friday’s dramatic leap will have done little to dispel the notion that $900 is going to be a piece of cake.

Path to $10,000?

Now, among gold bugs there are some bull’s bulls for whom $900 is just a weight station on the way to $10,000.  Regardless, we prefer to take the rallies one leg at time, since there is always the chance, at any point along the way, that bullion will correct with a viciousness capable of turning all but the die-hards into doubters. Besides, there are benefits to trading around a core long position, provided you can nail the swing highs and lows fairly precisely.

In that regard, Friday’s close above a Hidden Pivot resistance at 804.70 all but guarantees the continuation of the uptrend to the next Hidden Pivot, a number divulged in the Touts section of Monday’s newsletter. Check it out if you are scaling out longs with the intention of replacing the shares on pullbacks, or if you wish to short tradable peaks so that you are better cushioned when bottom-fishing subsequent corrections.

Rick Ackerman

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