Gold A Top Or Just Overbought
2025.02.11 12:50
While some bugs in the West are nervous that gold “might fall down”, in the East the world’s most savvy gold market investors are waiting in earnest for… a price sale of significance to buy.
Short-term Chart for Gold
Is a significant price sale beginning now, or is it already over?
For short-term gamblers, gold has already dipped $30 and $2910-$2900 is supported, but there have already been quite a number of these profitable plays this year, and it may be time for gamblers to take a break.
The Daily Chart
Gold is massively overbought (basis Stochastics) and a possible one-day reversal is apparent in today’s early morning trade.
I’ve regularly noted that a rally to $2950 would put gold about 5% above the $2800 support zone, and last night’s surge to $2940 has basically accomplished that move.
Investors should strongly consider buying gold, silver, and senior and intermediate miners if gold trades at or near $2800. Further buying is recommended at $2725 and $2600.
Looking at the stunning chart of the relentless failure of fiat versus gold, my strongest suggestion is this:
Western gold bugs should adopt an Eastern mindset and focus on using fiat money to get more gold, rather than using their gold to get more fiat.
The Key Weekly Chart
It seems almost surreal that gold has surged about $350/oz since the year began…
But this kind of momentum-oriented rally is typical when Stochastics (14,5,5 series) flashes a buy signal in the 50 zone. I urged aggressive gold stock enthusiasts to buy, and it’s been a very sweet ride.
It’s time to book some profits while noting that gold could still surge hundreds of dollars higher before a correction of significance occurs.
It’s vital for investors to sell to book profits into this kind of strength… without calling a top.
Amateur investors like to sell at exact tops. If an investor sells at an exact top, a major top, what they really did… was barely get out alive. Continued attempts to sell like that tend to result in failure and significant investor pain usually follows that failure.
Here’s the bottom line: It’s not time for gold market investors to call a top, but it is time to do some selling, to get richer!
A fresh MACD buy signal (into only its second week) is in play. Note how much room the Stochastics oscillator (14,5,5 series) has to run before becoming overbought. In addition, the “homerun indicator”, the TRIX, is beginning to turn up.
All this technical action is in sync with the price arriving at the top of the cup, which is a mild resistance zone. It’s an ideal time to book partial profits on short-term positions, while eagerly anticipating the indicated major upside breakout.
Another look at the (NYSE:) weekly chart. The surge from the bull wedge shown on the first chart could morph into a bigger handle or…There could be no handle at all. Not all chart patterns are “textbook”… and given the generational undervaluation of gold stocks versus gold, investors need to be as open to a near-vertical surge in the GDX price as to a handle/pullback.
What about the tariff tax tantrum being thrown with gusto by the US government? Will that affect gold stocks positively, negatively, or not at all?
To help answer that question, let’s look at the long-term US rates chart. In the big picture, tariffs are short-term sizzle and Chindian growth is the long-term steak. That growth will put substantial pressure on prices. The days of US corporations generating huge profits with low-paid Chindian workers will end. The ending will bring enormous inflation and sustained higher interest rates in the West.
The rise of the Chinese gold-oriented middle class is only modestly underway and the rise of India’s even more gold-oriented middle class has barely begun.
Long-Term GDX Vs. Gold
Decades of rising gold and silver stock prices lie ahead, and most of the fundamentals relate to long-term empire transition from the fiat-oriented West to the gold-oriented East.
A 200-year gold bull era is beginning, and most of the action will involve three billion Chinese and Indian citizens trying to buy a lot more gold than the world’s mines can provide. The bottom line: Good gold stock times are here, and great ones are near!
