Gold is in a 30 Year Bear Market

Discussion in 'Metal Futures' started by ess1096, May 14, 2008.

  1. ess1096

    ess1096

    I'm not a Gold investor so I don't care if I make money trading gold short or long, there will always be opportunity. But gold bugs should beware.

    Looking at the attached chart that goes back to 1975 you can see that gold failed to breakout when it hit resistance from both the downtrending channel as well as the failed 1982 and 1983 breakout highs near $1036.

    Yes, it could turn back around and breakout to new highs but if it doesn't it could see significantly lower prices for a while.

    If it DOES break out significantly above the $1030's to end the long term bear market trend the next rally could go to $1400 after a pause around $1175, and then a rally to resistance at $1600.

    JMO based on what I see.
     
    • gold.jpg
      File size:
      152.8 KB
      Views:
      268
  2. This chart is linear. Not logarithmic.

    This fact alone logically disqualifies your analysis. Sorry.
     
  3. ess1096

    ess1096

    No need to be sorry. I don't usually look at such long time frames and I didn't even think about using a log chart. Thanks for the heads up.

    I tried it again using a semi-log chart and dragged a paralell from the lows up to the 1980 high and I think the outcome is even more interesting. the Feb 2008 monthly close was right at the trendline. Then there is still the horizontal resistance in the $1030's also.

    In either case it hardly matters in the short term. Just found it interesting.
     
  4. Not sure where you got your prices. Gold didn't trade over $1000 back in the 1980s. The high on gold back then was around 880.

    Maybe you're looking at one of those continuous futures charts. Which means your chart doesn't mean anything. You can't draw a downtrend line on the long term gold chart, other than over the last several weeks price action. When gold went over $900, it was setting new all time highs.

    Here's a link to a monthly chart on gold:

    http://www.the-privateer.com/chart/usgmonth.html

    OldTrader
     
  5. ess1096

    ess1096

    I'm aware that Gold never traded that high before. I am assuming that the chart is inflation adjusted. It's a comex gold pit chart and the data is Tradestation @GC.P

    As I've said, I don't trade off the 30 year chart but I just found it interesting. :)
     
  6. You don't mention anywhere in the chart that is is "inflation adjusted". If so, your chart is meaningless. Before I thought it was just wrong. LOL.

    Who do you know that trades anything based on an inflation adjusted chart? Ridiculous.

    OldTrader
     
  7. If you used the real rate of inflation instead of the published CPI used to reduce COLA payments, it would show just how undervalued gold really is.
     
  8. PaulRon

    PaulRon

    please let this thread die...
     
  9. Fairly obvious there was some factor whereby the long term price action of Gold (we all know too well) had been skewed by something else with inflation being the most likely culprit. If the latest drop occurs to the bottom of the channel that'll mean gold has a negative price, though. If you take away the limitations of the channel then the price goes anywhere, and by the looks of it (adjusted for inflation) is very cheap.

    Somewhere I read gold always falls off in the summer months and builds up in autumn. It's out of sync with oil and the gold miners are looking relatively cheap. I know where I'm sticking my cash and it's not oil futures. Thanks ess1096 interesting indeed.
     
  10. Lets not

    <object width="425" height="355"><param name="movie" value="http://www.youtube.com/v/Uc2eepcBA-U&hl=en"></param><param name="wmode" value="transparent"></param><embed src="http://www.youtube.com/v/Uc2eepcBA-U&hl=en" type="application/x-shockwave-flash" wmode="transparent" width="425" height="355"></embed></object>
     
    #10     May 16, 2008