However I'd like to highlight that even if someone believes in Gold as a long term real money vs indebted and inflated fiat ccys, it is very important when and how you buy, or accumulate it, as despite our views, mkt reaction and technical setup for Price trends can be a lot longer "irrational" (well respecting the markets we should consider Price action always as rational, as markets do not have feelings and memory, only people do... but this is another theoretical question)
- Validation of setup has happened this week. Price broke 1150 key resistance. Chikou Span breaks below past candles and enters into open space ahead.
From now 1150 is a support and a long term strategic turning point, which of course as time passes will come lower with average lines.
- The long term remains vaild
- Heikin Ashi setup is full
- setup is heavy , but due to the break and sharp price collapse 4 days ago, price has got too far below equilibrium. Normally after such a move we can see some form of consolidation or maybe even a pull back to supports.
- The same is visible in Heikin Ashi setup: a consolidation has started: after haDelta dropped to extreme low level, with smaller candle bodies following, haDelta started to correct. If you look only the Heikin Ashi candle pattern, you can see that despite yesterday candle had a lower low, its body was already smaller than the previous candle's, and it looks like today candle with even a smaller body and with no lower low confirms the ongoing consolidation.
For a few more days I do not expect Price to reach or break further below 1180-1185, what's more, based on short covering a correction towards 1120+ area is a bit more likely. However long term the charts still suggest Gold can remain under serious selling pressure.
I see a lot of arguments why Gold is a buy, and I also think the fiat ccy systems are doomed to fail. But on the other hand, Gold is not just considered as money, but also as a commodity, denominated in USD if you follow spot Gold ( XAUUSD ). And while I agree that in the long run as a money it is probably better to hold Gold than any other indebted fiat ccy, it is still important what level and in what sizes you start to accumulate it. If you consider it as a commodity and you compare it to all other commodites, you can still see it still relatively "outperforms" most of the others, which already dropped a lot more than 50 % from their peaks seen a few years ago.
So my conclusions:
1. In the long term it will be a buy - but the long term Price action and chart is now - so it will be a buy when the long term tech setup changes.
2. Short term it may correct up, maybe even to 1140, but playing this counter trend trade is really risky, hard to achieve a 1:2 risk/reward ratio with hgh probability, so even if you play it, you must do it only with 0,5 or even less trade (risk) unit.
3. Patience and trend following aproach is the most important and believe me its payout is the best in the long run! -> less frustration, and ultimately more P/L, more yield. So why sould you always get involved in all swings, in all instruments? Just to get a special (in fact a fake) "feeling" of being right as often as possible? I the long run "being right" doesn't necessarely mean "makeing serious money".
I really think it is dangerous approach and totally useless to call any bottom or top ahead! Now really tell me can it go to 1050, 900, 800 or even down to 650? Yes, all is possible. Can it reverse from 1085 to 1250? Yes why not? But what and when will happen to Gold, no one knows!!! No one is an Oraculum on markets (unless he is an insider :-) )
So my best advise still is: Don't be a price/trend predictor, but try to be a price/trend follower! Act on clear signals, not on believes, theories or assumptions.
One more thing, I will not have to read this article again by the time Gold shoots up, because by then my model will tell me go and stay long, and I will have a totally different view. That means I will have a new bullish article for that present, and this past will not matter at all.
In fact no one really knows what is exactly driving Gold price, and what is the real fair value of it. I mean if you look at how much gold has been produced (excavated) in history, compared to how much fiat ccy was created out of thin air, Gold could be at 14.000 USD/oz as well. However the amount of credit and available liquidity (cash) in the economy alone is not enough to drive Gold price higher alone. The question is velocity of money flow, and also if the people who use the certain ccy do believe that their currency system is sustainable, or do they question their own money? If they lose faith or they realise they are being "robbed out" by the government/central banks, than at some point they stop accepting the unbacked fiat money, they try to escape from it as quickly of possible. Than they rush to buy phisical Gold.