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Gold Is on the Verge of a Major "Buy" Signal

By Jeff Clark
Tuesday, January 27, 2015

Gold has been on fire.
 
Over just the past four weeks, the price of gold is up $110 per ounce. That's a gain of almost 10%. It's one of the best monthly performances for the metal since the price peaked back in 2011.
 
If gold can hang onto these gains over the next week, we'll have the first long-term buy signal for the metal since mid-2009. And it could lead to big gains in the price of gold...
 
Take a look at this long-term monthly chart of gold with its Moving Average Convergence Divergence (MACD) momentum indicator... 
 
 
The MACD indicator is often used for determining overbought and oversold conditions. But it can be used as a long-term timing indicator, too.
 
Without getting too complicated, when the black MACD line crossed above the red MACD line, we have a "buy" signal. When the black line crosses below the red line, we have a "sell" signal.  
 
The first blue arrow on the chart shows the last major buy signal from the MACD indicator. That kicked off a long-term rally in gold. The price gained more than 100% in just two years.
 
The red arrow on the chart shows the last MACD sell signal. That downturn has lasted three years so far. And prior to this month's rally, gold had fallen almost $600 per ounce – roughly 30%.
 
But it looks like the decline has ended.
 
Last week, the black line on the MACD indicator crossed above the red line. That's a buy signal. And it could lead to huge gains in the price of gold over the next several months.
 
There's just one problem...
 
This is a monthly chart. All that matters is how things look at the end of the month – which is still a few days away.
 
If the price of gold declines this week, then the black line on the MACD indicator may turn back down and end the month below the red line. That will mean the downtrend remains intact, and it'll be at least another month before we can get a buy signal.
 
On the other hand, if gold can hang on to its recent gains – or even add to them – we'll end the month with a new long-term buy signal for gold.
 
It will be the first major buy signal since 2009. And it should lead to much higher gold prices.
 
Best regards and good trading,
 
Jeff Clark 


Further Reading:

Matt Badiali says another precious metal is gearing up for a breakout – silver. "There's a rare extreme setting up in the silver sector," he writes. "Based on history, we could see at least double-digit gains over the next two to three years." Get all the details here.
 
If you're looking to invest in natural resources like silver or gold, this classic interview with master resource investor Rick Rule is a must-read. In it, he reveals everything you need to know to master the resource market's cyclicality. If you catch one of these big cycles at the wrong time, you can lose a fortune. But if you catch one early, you may never have to work again…

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Market Notes
Alcohol giant Constellation Brands is up 430%-plus over the past three years.
 
Health care boom continues... sector fund IYH leaps to an all-time high.
 
Private-equity firm Blackstone Group hits a 52-week high... shares climb more than 18% over the past three months.
 
Copper prices are down more than 11% in 2015.
From The Crux
Market Watch
Symbol Price
Change
52-Wk
S&P 500 2056.75 +0.2% +14.9%
Oil (USO) 17.11 +0.7% -50.5%
Gold (GLD) 122.87 -1.1% +0.5%
Silver (SLV) 17.17 -1.9% -10.4%
U.S. Dollar 94.71 -0.3% +17.7%
Euro 1.13 +0.8% -17.4%
Volatility (^VIX) 16.02 -3.8% -11.7%
Gold Stocks (^HUI) 195.44 -0.5% -11.0%
10-Year Yield 1.81 -0.6% -33.7%

World ETFs
Symbol Price
Change
52-Wk
India (IFN) 29.61 -0.5% +65.2%
China (FXI) 43.80 +0.1% +31.5%
Taiwan (EWT) 15.85 +0.4% +16.7%
USA (SPY) 205.25 +0.1% +17.0%
S. Africa (EZA) 69.18 +1.9% +22.0%
Singapore (EWS) 12.93 -0.3% +9.1%
Israel (ISL) 16.61 +0.6% +3.4%
Japan (EWJ) 11.60 +1.2% +0.6%
S. Korea (EWY) 57.45 +0.1% +0.9%
Canada (EWC) 27.22 -0.2% -1.2%
Lat.America (ILF) 32.01 0.0% -2.1%
Russia (TRF) 9.04 -3.1% -34.3%

Sector ETFs
Symbol Price
Change
52-Wk
Semis (PSI) 25.56 +0.0% +41.6%
Utilities (XLU) 48.95 -0.4% +33.4%
Real Estate (IYR) 82.77 +0.5% +33.9%
Biotech (PBE) 53.76 +0.8% +31.5%
Health Care (IYH) 150.50 +0.4% +29.4%
Retail (PMR) 38.80 +0.1% +23.8%
Transportation (IYT) 162.13 +0.6% +25.7%
Big Tech (QQQ) 104.16 -0.1% +21.9%
Consumer Svcs (IYC) 138.06 +0.6% +19.4%
Financials (IYF) 87.85 +0.2% +14.6%
Defense (PPA) 34.95 -0.3% +14.3%
Software (PSJ) 39.52 -0.7% +9.9%
Insurance (IAK) 47.80 +0.2% +10.8%
Industrials (IYJ) 105.49 +0.1% +10.6%
Basic Mat (IYM) 81.03 +0.1% +6.6%
Telecom (IYZ) 29.56 +0.4% +4.2%
Media (PBS) 25.33 +0.3% +1.9%
Water (PHO) 24.87 +0.5% -1.1%
Construction (PKB) 21.04 +0.2% -3.7%
Alt. Energy (PBW) 5.02 +2.2% -20.6%