Déjà Vu All Over Again
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Yesterday we wrote that gold should make a run to $1,290 and probably reverse from there and it did. The footprint we were seeing was as clear as a bell and today we are expecting the opposite of yesterday with a test of the $1,270 level and a possible reversal. Gold and silver are in the challenging pattern of consolidation, the most torturous patter for traders and investors.
All markets go through the consolidation pattern, usually spending about 65% of the time churning back and forth between two major levels while deciding in which direction to break out. In other words, what is going to be the new trend? In the metals, we believe the breakout will be to a new uptrend when it comes; the only question is when. Inside of the consolidation pattern, the metals look great.
The big question is what will be the impetus to finally let the metals break out to the next trend. We can start with the vote today on the new tax plan, which is as bad of a plan as the House and Senate could have written. This plan is very destructive to the middle class and could spark some hard-asset buying in the metals. Look for gold to hold $1,270 and make another run to the upside as the new bull market is being born.