The Gold Sector Awakens From Its Deepest Slumber

May 14, 2019

It has been a considerably long time since Thirdeyeopentrades offered up thoughts on the gold market here on Gold-Eagle.com. But the time has come to sit up and pay attention because this is going to be a very important C-rise to watch.

The Aden Sisters have written a great deal on gold’s cycle patterns that they discovered when I was much younger. The cycle goes like this: At first there’s an A-rise, usually quite modest. After that, a modest (usually, but not always just modest) decline ensues. Once that B-decline ends a C-rise begins, and that’s the greatest rise in price during the cycle. Then comes the D-decline off the C-rise peak, a very, very painful contraction in price, one so deep that many swear never to buy the gold sector again. Then the cycle repeats.

Let’s examine a weekly gold chart to reduce the noise. The current ABCD cycle started last August. Gold made an A-rise to around $1350. After which, a B-decline pullback took gold back into the $1260 area. Thirdeyeopentrades believes that the B-decline ended during April. Currently, it appears that a new C-rise is starting.

The thing about gold which Thirdeyeopentrades discovered so long ago is that gold rises further than you think and also falls a lot more than you fear. It also loves to kick off new C-rise day trade passengers, who take profits and wait for pullbacks that never come.

In the weekly gold chart just presented, a large ascending triangle has formed, with a falling bull wedge inside which gold just broke out from. During new cyclical bull market C-rises, gold has a tendency to find support near its 30-week moving average. That’s exactly what we have here!

This daily gold chart includes other important indicators watched by Thirdeyeopentrades. Gold tends to follow the Japanese Yen and cannot really rise when the Yen isn’t. But the Yen is strong, fueling support for gold.

Gold stocks, on the other hand, take a while to respond, as if they don’t believe a new C-rise is present. The bullish percent indicator is always a lagging indicator. It’s falling now, but Thirdeyeopentrades thinks it will soon reverse upward again.

Note the tightly fitting rising support line for GDX. A “Load the Wagons” signal is underway and the suggested stop for new purchases is to be placed directly under that rising support line, say under $20.15 to start with if trading GDX as a vehicle. There are many vehicles to choose for gold stocks exposure, GDX is unleveraged and gives one terrific no-brainer exposure to a number of the larger gold miners.

Thirdeyeopentrades also likes to watch moving averages that appear to matter. This weekly chart illustrates how gold behaves along its rising 100-week moving average. The current C-rise reversal targets $1360 short term. That’s a multi-year resistance line that needs to be taken out, and it’s unknown if this C-rise will be able to do that. If it does, the next target would be $1450.

Thirdeyeopentrades also watches gold priced in other currencies. As you can see, gold is breaking upward priced in Euros.

Gold, as priced in a basket of foreign currencies (inverse US Dollar), has been rising inside a channel since 2014.

It’s possible that Stage 2 finished at a lower projected price point. If that’s the case, gold may be finally breaking into Stage 3. Alf Field came up with his own targets years ago, and Thirdeyeopentrades has kept a watch on this chart for many years. As you can see, gold is at a very important crossroads. Has it enough energy to push thru resistance in the mid-$1300’s this time?

The HUI Index will produce a C-rise cycle MACD buy signal on a crossover, which does appear imminent within a few trading days. With a Full Moon coming this Saturday May 18th, Thirdeyeopentrades is anticipating some fireworks!

The journey for gold and gold stocks will be long and arduous. But several technical elements are in place and we’ll see how this goes. Load the wagons, Larry and keep your stops tight.

Thirdeyeopentrades is offering a Gold-Eagle.com specially priced Memorial Day six-month newsletter trial for only $99.00, but you have to ask for it! That’s a minimum of 26 weekly issues, published each Sunday. The gold sector, 420 sector and general markets are reviewed each week. Why not give Thirdeyeopentrades a try?!

Robert Cote, Jr.

Thirdeyeopentrades Publisher

thirdeyeopentrades@gmail.com

www.thirdeyeopentrades.com

Everyone's personal situation is different and technical analysis never guarantees outcomes. Playing in gold and silver fields is risky, so you should really consult your own expert on topics like this. Don't swing a bat blindly. This essay is intended as an observation and for entertainment, so you really need to do your own work and then determine your best investment strategy with your own registered investment adviser.

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The term “carat” comes from “carob seed,” which was standard for weighing small quantities in the Middle East.