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Gold Is Setting Up for Its Next Big Move

By Jeff Clark
Thursday, July 24, 2014

 
However, since my essay, gold has gone nowhere. The metal is only up around 2%. For comparison, the S&P 500 is up around 5% in the same timeframe.
 
But that's about to change. Gold is setting up for a big move higher...
 
Take a look at this chart of gold...
 
gold chart
 
Gold is trading above both its 50- and 200-day moving averages (DMAs). These lines should provide support and limit any downside action in the metal in the short-term.
 
The metal's next significant resistance level is up around $1,380. That's about a 5% gain from today's gold price. But gold is setting up for a much larger move...

The chart has developed a long-term inverse "head and shoulders" pattern.
 
The left shoulder forms when an asset hits a low point and then rallies. The head is made when the asset drops to a lower low and then rallies back to its previous high. The right shoulder forms when the asset drops back down and makes a higher low.
 
 
If gold can rally above the "neckline" of the pattern at about $1,380, the projected target is up around $1,600 per ounce.
 
In the next week or two, gold may pull back and test its 50- and 200-DMAs. But the long-term picture for gold is still bullish. Traders should use these pullbacks as opportunities to buy. It looks like the metal is headed much higher.
 
Best regards and good trading,
 
Jeff Clark


Further Reading:

"It's time to own gold stocks," Amber Lee Mason writes. "The problem is, gold stocks are extremely dangerous for the average investor… So today, I'm going to cover one of the biggest mistakes investors make with gold stocks." Find out what it is right here.
 
Amber also reminds readers that there are plenty of ways to profit on gold outside of the traditional stock market. If you're interested in betting on higher gold prices, they're all worth knowing about. You'll find a list of ways to profit from gold, along with a brief look at their pros and cons here.

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Market Watch
Symbol Price
Change
52-Wk
S&P 500 1985.96 +0.1% +17.4%
Oil (USO) 38.11 +0.4% +0.1%
Gold (GLD) 125.44 -0.2% -3.3%
Silver (SLV) 20.09 -0.1% +1.6%
U.S. Dollar 80.81 +0.0% -1.4%
Euro 1.35 +0.3% +2.1%
Volatility (^VIX) 12.01 -1.9% -5.1%
Gold Stocks (^HUI) 239.93 -0.2% -8.6%
10-Year Yield 2.46 -0.4% -2.4%

From The Crux
World ETFs
Symbol Price
Change
52-Wk
India (IFN) 25.75 -0.2% +30.1%
Taiwan (EWT) 16.32 +0.1% +20.3%
S. Africa (EZA) 71.07 +0.6% +19.9%
S. Korea (EWY) 65.20 -0.5% +18.8%
USA (SPY) 198.46 +0.1% +19.6%
Israel (ISL) 17.80 +0.1% +18.8%
Canada (EWC) 32.68 +0.3% +18.4%
China (FXI) 39.58 +1.3% +16.3%
Lat.America (ILF) 40.73 -1.1% +11.9%
Singapore (EWS) 14.09 +0.5% +9.0%
Russia (TRF) 14.39 +0.4% +2.8%
Japan (EWJ) 12.11 -0.3% +2.6%

Sector ETFs
Symbol Price
Change
52-Wk
Semis (PSI) 22.71 -2.0% +33.4%
Big Tech (QQQ) 97.12 +0.5% +32.8%
Biotech (PBE) 43.56 +2.0% +35.2%
Transportation (IYT) 151.41 +0.1% +31.4%
Basic Mat (IYM) 88.10 +0.4% +25.2%
Defense (PPA) 32.48 -0.7% +23.2%
Health Care (IYH) 130.26 +0.5% +23.5%
Industrials (IYJ) 103.50 -0.5% +18.9%
Software (PSJ) 36.72 +0.1% +17.0%
Consumer Svcs (IYC) 124.50 -0.2% +16.1%
Media (PBS) 25.57 -0.7% +15.2%
Alt. Energy (PBW) 6.59 -0.6% +13.3%
Utilities (XLU) 42.56 -0.1% +12.0%
Financials (IYF) 83.92 +0.1% +11.7%
Water (PHO) 25.83 -0.9% +10.9%
Insurance (IAK) 47.80 +0.2% +12.7%
Construction (PKB) 22.14 +0.1% +10.0%
Real Estate (IYR) 73.24 +0.1% +9.7%
Telecom (IYZ) 30.28 -0.1% +9.0%
Retail (PMR) 33.49 +0.2% +4.0%