Gold had a 10year strong uptrend to $1,900 in 2011, before a 4year drop to $1,040 in Nov 2015. Rallying back to $1,380 last year and now hitting new highs for 2017, the question is: is the trend your friend?
Take a look at the long term price of gold on the monthly chart below, what do you see?
Monthly Gold Chart 13-Apr-2017
I see a very strong uptrend in the price of gold from the early 2000's to 2011. Then, I see a break down from a high of $1,900 in June 2011 into a 4 year bear market. So what happens next?
So, here is the summary: Gold had a nearly 10 year strong uptrend, nearly 4 year downtrend, followed by a clear signal that a new bull market has emerged. It is currently trading at $1,285.21 as I write this, which a close this week would have very bullish implications and would set up for a very strong 2017.
In addition to the strong performance so far, the current move higher has focus fixed on the $1,300 level. If it does this, it will have broken the final key resistance trendlines [solid black line on chart above]. For a closer look, review the weekly chart below:
Weekly Gold Chart 13-Apr-2017
So what is the point? It is important that gold ends this week strong and over the short term breaks the key resistance of the 2011 trendline. From there, long term focus will shift to breaking the $1,380 - $1,400 region [where the 2016 high resides].
In a previous update a few weeks ago, I referred to the term "the trend is your friend", and how when someone is telling you that the "trend is your friend," they are simply telling you to follow the herd.
Taking positions and buying gold is clearly the trend in play and, as you can see, the price is rising. There is still the opportunity to acquire gold before it goes higher so I am telling you "the trend is your friend."