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The gold buffs have not had a riveting time of late – well at least compared to equities. And gold stocks have not had such a great time either.
You can see from the chart below that the precious metal is going no-where:
click to enlarge
Having topped US$1008 on July 20 this year it has been locked in a $140 range ever since.
The weekly chart with an Elliott gives us no better clue – it merely confirms what we already know – it is range trading:
click to enlarge
We need to go up another time frame – to a monthly chart before we get the big picture:
click to enlarge
But it is an interesting chart nevertheless. We can see that gold came off a long term trading range where it struggled at the US$400 before eventually breaking through and moving strongly then for the next four years. This is how markets behave.
But the same can happen in reverse – and does. So what we are seeing now is a struggle at current levels. And my expectation is that it will struggle and more than likely will come back to the US$700 levels for consolidation before attempting a new high.
But that high could be four or five or more years away. And anything can happen between now and then.
A monthly is not much use for trading but it plays a better role as a beacon far away – giving us some broad guidance.
Enjoy the ride
Tom Scollon
Chief Analyst
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