Been there, done that. Is the gold bull over?
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
I will be the first to admit that this idea was not mine. It originated with Gary Wagner who writes for Kitco.com. In an article posted last week, Mr. Wagner pointed out that the 2019-2020 gold chart is strikingly similar to that of 2010-2011. He speculated whether gold could go into another deep dive as it did from 2013 to 2016. We decided to investigate. Here are the pertinent two-year charts:
In the next chart, we normalize the gold price over each two-year period to illustrate how closely the patterns resemble each other:
Next we plot the fate of gold after it hit a then all-time high of $1895 per ounce on September 8, 2011:
Note that with exception of a false start to the upside in H2 of 2012, it made a series of lower lows and lower highs until reaching bottom in December 2015.
Now let’s go to the present. Per the six-month chart, gold has mostly made a series of lower lows and lower highs since its peak at $2063 per ounce on August 6, 2020:
In my opinion, any market analysis should propound the idea that past is prologue. Here is what we know:
Therefore, the question must be asked: Could it be a harbinger for the coming gold market?
Please note that I am not predicting this will happen again. The idea is merely food for thought and makes an interesting topic for further discussion.
As Linda Richman (aka Mike Myers) would invariably say on SNL’s Coffee Talk, “Talk amongst yourselves”.
Ciao for now,