Gold Market Wire
News, analysis and commentary for gold traders and investors
Gold Market Update
Gold Breakout Has Begun
May 15, 2020 - (Gold Market Wire) - Gold started its breakout yesterday as the upper band of the symmetrical triangle that we have used as our guidance fell, and the rally began. The gap up is now obvious and is following through. As we have related repeatedly, our expected May drawdown was going to provide an entry point for a long position... and the technical markers would tell us when to establish it.
Now we ride the position and must expect back and fills along the way. Aggressive traders can use those retracements to add to length with a stop if the uptrend fails, which to us, doesn't look very likely.
We would also be remiss if we didn't mention the silver market today as well. It has also broken through resistance and is heading up strongly this morning, some 2.3%+ higher.
The tailwind at the back of the precious metals market brings little cause for joy, but remains sound from a trading and investment standpoint. The public, and even now within some corners of the (fully discredited) mainstream media, are starting to realize that government responses to Covid-19 have been both inept, over-zealous and at worst willfully manipulative. This kind of environment, where the public loses general confidence in the political status quo is what Gold feeds on.
America is now heading into a Presidential election that is likely to entail violence and retributions of all manner, from all facets of society, pitted against each other in such ferocious rage that the society itself seems ready to fracture in conflict. Similar sentiments are being echoed in Europe and have been manifested by the recent German Constitutional Court decision defying the European Central Bank policy of Bond buying, and challenging the European Court of Justice's authority. It looks more and more as if the country is ready to throw the towel with regards to the Euro and the by extension, the EU itself.
The German economic establishment is not deluded. The southern nations of Europe have imposed a nearly totalitarian state of lockdown and economic destructive paralysis which, in some strange political calculus, has been seen as an opportunity to demand that the northern nations of the EU transfer their economic wealth to them on a wholesale, unregulated basis... absent any oversight. Germany and the Netherlands have balked, realizing, all too correctly, that such a move will scuttle their own economies, as they attempt to drag them down below the waterline with them. Solidarity at last, at the bottom of the economic ocean. Specifically, Italy stands at the precipice of economic implosion while the European banking system prepares to witness mass insolvency.
And so, precious metals start to charge higher. Gold and Silver smell the fear of the public and the fear that politicians will resort to ever more draconian measures which will simply cause economies to contract even further. The precious metals markets smell the draining of confidence - and are disregarding any wrestling over considerations that such a loss will produce inflation or deflation.
That is what Gold does - it smells out fear, and moves on the back of it.