Today one of the greats said despite volatility the gold bull is headed to $1,800.
September 2 (King World News) – Top Citi analyst Tom Fitzpatrick: “Since the start of the year the two most impulsive and consistent trends in global financial markets have been the rally in Bonds and the inversion of the US curve in particular and the rally in precious metals – the best performing currencies.
Gold 3 month implied volatility posted a bullish outside month in August giving the signal that higher levels will be seen. The state of global fixed income markets and the point from which major central banks will need to adjust policy means that the months ahead will not only see higher volatility but a higher Gold spot price too, even if the days ahead might see a consolidation or pullback. The only market that looks more attractive than Gold is Silver.
The following chart should be seen with this backdrop in mind. The top four on the list are all precious metals, which are miles ahead of anything else. That says a lot, especially when coupled with the rally in Bonds. We therefore put great emphasis on the latest developments…(see chart below).
PRECIOUS METALS: The Best Performing World Currencies In 2019
Gold Volatility Is Bullish
August saw a bullish outside month on Gold 3 month implied volatility. The channel top on the log chart above comes in at 16.52% which we believe will give way for a move towards the 23% – 25% area as was seen after April 2013 when Gold was on its way down from similar spot levels. This time, given the way fixed income charts are trending, the directional move in Gold should continue to be up.
GOLD 3 MONTH VOLATILITY: Bullish Outside Month Indicates More Upside For Gold & Gold Stocks
Gold Headed To $1,800
Gold continues to trade around the next break levels at $1,522-$1,532. The past week saw a rally through there but the weekly close was marginally below suggesting a brief period of consolidation within the uptrend. That would not make it dissimilar to what was seen at the last breakout through $1,375 in June of this year. Back then we also spent a few weeks consolidating but ultimately any pullback was relatively shallow and the uptrend remained in place. The deepest pullback then was $58. Similar (action) now could mean we could trade just below $1,500 before the uptrend resumes. Ultimately the inverted head and shoulders targets $1,690 and we have good resistance above there in the $1,800 area (see below).
GOLD: Brief Consolidation Possible But Uptrend To $1,800 Still In Place
Importance Of Gold/Silver Ratio
The Gold/Silver ratio has taken out the 55 week moving average and channel base with a notable gap to the 200 week moving average which is at 77.88. This we believe will be tested over the weeks ahead. With Gold at say the $1,690 target and the ratio at 77.88, if it occurred at the same time, would put Silver itself at $21.70, which is quite consistent with the bias that the next resistance level on Silver at $21.14 gets tested. That level is very pivotal on a much longer term chart setup (double bottom) that could argue for a very sizable rally to $28 over the months and perhaps years to come (see below).
Gold/Silver Ratio: Silver In The Middle Of A Big Rally
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In the meantime, other important releases…
This Is What Is Really Driving The Price Of Gold Higher CLICK HERE TO READ
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A Look At Where Things Stand In The Gold & Silver Markets CLICK HERE TO READ
Something To Think About, Plus The Chart Of The Day CLICK HERE TO READ
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