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Déjà Vu All Over Again

Commentaries & Views

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.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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