Gold patience is worth it | at close 12 March, 2021
Gold Price Forecast relative to
Long Term Monthly (LT-M) - Medium Term Weekly (MT-W) - Short Term Daily (ST-D) - and Hourly (not shown) data.
(Previous week in brackets)
|Au Trend||↓ (↓)||↓ (↓)||↑ (↓)|
|Au % Risk
|54 (53)||10 (25)||32 (16)|
Total allocation 50% (55%)
Physical Gold: Nature's currency
12 March close: This is a corrected publication to include the March 12 close comment and corrected figures above which were erroneously omitted earlier.
Gold/USD had a Friday London fix at 1704.80 and closed $20 higher at 1724.90.
Gold and precious metals generally have not been in Vogue of late. Attention was much more focussed on crypto and equities. The rally late last week looks weak technically with hourly risk already in an overbought condition. Daily is in a weak uptrend which could easily turn down again for another attempt to crush the price. Weekly at 10% is in a low risk range. Broadly Gold looks suspicious and could experience another drop into the 2019 support zone around 1500. The support argument for Gold is two-fold. 1, Daily risk has shown bullish divergence with an evenly risk weight bottom at the February and March lows, where the recent March price low was $200 lower.
2, Monthly risk weight should be expected to develop bearish divergence in virtually all trading tools at the end of a major trend. That hasn't happened yet. Finally precious metals should still be targeted to reach our medium term chart objectives, because that is the historically most likely scenario. Our cushion is substantial enough to stay fully committed to precious metals, simply because the inflation ghost is on our back. That is a dangeous enough scenario to keep our wealth preservation hedge alive against short term technical odds which do give mixed signals. As we discuss in our Silver blog, we may swap just a little bit of silver for Gold and Platinum if the Gold/Silver ratio drops into a short term oversold condition in the early part of the March 15 trading week. We have chosen to be very patient without trying to top pick, bottom pick or get nervous during these times of sometimes irrational market behavior. No Change for now.
5 March close: Even though gold is under pressure price has nearly traveled the same $310 length (july-Nov 2020 drop 2075-1765) from the most recent January $1960 high. With Daily risk turning up this week gold is not deeply oversold but is finding mild support. We only see an allocation consideration watching an unfolding price relationship between the precious metals. Platinum still appears strong against both Gold and Silver even though we are in a correction following the strong platinum advance in 2020 and into February this year. The gold narrative in mainstream and alternative media is focussing on unpredictable fundamentals with bitcoin taking on the role a the modern day inflation hedge. It may be a tough call and we would only look to maybe shift a little bit more Gold into Platinum. Such trade is to potentially benefit from price dispartity against the cost of storing physical. See the comment on the various ratios in this week's Platinum and Silver blogs. The core gold position remains unchanged for now as we need to see risk weight develop a bit more and economic conditions unfold under the helicopter money umbrella. Technically Gold is still a very long term play where both Gold and Silver are spot on the long term inflation trend. Platinum is still undervalued long term.
12 March comment
The current risk weight downtrend at 68 is still expected to show bearish risk to price divergence down the road. That road could be 2 or 8 quarters or more, but through the times this is the most realistic scenario to expect if a major uptrend cycle is finishing. The question is: to which elevated levels will the market eventually take the price Gold as a result of MMT?
Gold/Euro live price
12 March 2021 close: Gold vs Euro did develop bullish risk weight divergence in the Daily time scale which may be indicative of a bit more dollar strenght in coming weeks. Otherwise the technical picture is very much the same.
5 March 2021 close: The chart and risk weight picture for Gold/EUR is very similar to that of Gold/USD and the same analysis applies. We will possibly seek to add a small percentage of platinum and release some gold. Both metals are still well above our entry levels with Gold at $1220 and Platinum at $900.
Gold/British Pound live price
12 March 2021 close: GBP has the same risk weight development turning up sharply in the short term time scales whilst Weekly is also turning up at around 7% risk. This is a confirmation and slightly more bullish signal for Gold.
5 March 2021 close: GBP still looks the weaker currency against gold even though GBP has behaved contrary to the risk weight picture. That historically results in 'pay back time'. It means we are on a tack course against the trend. It is like having headwinds sailing from the Canaries to the Caribbean where the primary wind direction is genarally more easterly. It means GBP is likely to turn south again against most majors except perhaps the USD.