3rd try at breaking through long-term resistance
Updated
Gold is showing a classic long-term cup and handle period. Spent about 7 years in the "cup" (long shakeout period from the bubble that had formed after the last financial crisis followed by an eventual rally to previous all-time high). It has spent over 2 years now in the "handle" (period of consolidation giving the appearance that price can't break through the previous all-time high). After a recent shakeout and false breakdown from the handle pattern, it looks like it wants to test the all-time high again and this time there's a major catalyst (flight to safety due to all the uncertainty recently with the banks and the potential for yet another financial crisis). Due to that, I don't think you need to wait for a breakout of the all-time highs around $195 in GLD but that would be a safer entry (a monthly close above that level). Of course another shakeout from that level could follow because if I have picked up on this potential trade, then many others likely have also. Anyway, I am just speculating and not a financial advisor, if you decide to follow this please trade at your own risk and diversify (this trade won't break the bank for me personally if it doesn't work out and it shouldn't for you either).
Note
Update - in no man's land atm. Appeared to be turned away from long-term resistance a couple months ago but hasn't broken down yet either. IF it breaks down, may find support at the 50-mo. EMA but my guess is it may test the 200-mo. this time. That said, an upside breakout is still possible also.Note
4th attempt at breaking out of long-term resistance, RSI has cleared overbought condition from the first attempt by consolidating for over 3 years now. The "handle" of the chart pattern has also started to form a reverse head & shoulders pattern as well. I think it's just a matter of time before it breaks out, not sure how high it will go IF it does but my very rough guess is it would (eventually) get to at least 400/share, maybe even 600/share or even higher because this chart pattern is over a decade long and warrants at least a 100% rise, if not 200% or more. All that said, as I originally stated, a close above $195 would be a better signal to trade on and diversify so that if this trade doesn't work out, then it doesn't break you but rather can hopefully provide some steam to your portfolio over the next several years.Note
Strong breakout candle this month, finally held through the monthly close. May have yet another shakeout before it really gets going but I think people are more focused on Bitcoin in general right now, so Gold could stay under the radar as it potentially moves higher quietly.Note
And I like Silver as well, should follow Gold if it continues to move higher.Note
(If possible) I'm going to exchange my positions in GLD with PHYS today because I like that PHYS holds physical gold bars compared to GLD which says they sometimes hold gold bars and the annual expense ratio appears to be about the same. Also exchanging my positions in SIVR with PSLV to get physical ownership of silver (the physical silver fund expense ratio is double the ETF). Regardless of that personal change, still really like the prospects for gold and silver over the next several years.Note
I was able to make the switch (wasn't sure at first because it sounds like these are closed-end Canadian funds). In addition to holding physical metals, the closed-end feature of these funds makes me like them even more because shares are only issued once at the IPO to raise cash for initial investments.
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