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Our viewpoint is that the long-term trend for the gold price is up

(OroyFinanzas.com) – We are getting ever closer to a big move – and the longer the current limbo persists, the bigger the move is going to be. This is because, even though the price of gold is not moving much, the internal technical condition of the market is steadily changing, investors and traders who are interested around these price levels are taking positions, either long or short, and the winning camp can be expected to hold their positions once breakout occurs, fuelling the emerging trend.

Of course, our viewpoint is that the long-term gold price trend is up, with an upside breakout considered probable, unless and until the long-term uptrend fails

Note that the dollar chart shown above is a 1-year chart, as the 6-month chart does not give sufficient perspective.

The current state of indecision is not confined to the gold market, it is evident also in the dollar itself, the broad stockmarket, and in various other markets. One older and wiser Wall St veteran recently commented that he had never seen such confusing indicators in his entire career, and I know what he means. This confusion arises from various sources; many market participants are awaiting the outcome of the US elections, indicators are probably distorted and skewed by the heavy manipulation occurring ahead of the elections, and statistics are being massaged, an obvious example being the CPI index.

I have received conflicting prognoses from various Elliott wavers, with some totally bearish on gold and silver and others bullish, the one thing both sides have in common is that they are convinced that they are right. I studied Elliott wave long enough to realize that if one of them is convinced he’s right, he’s bluffing, not just to you but himself. Wave counts are notoriously difficult at times, and if you get the count wrong, you’re scuppered. Having said that I can see the point that the bearish wavers are making when they refer to the April plunge in silver as being an impulse wave, and the subsequent rally as a bear market rally.

That decline in April was ugly, very ugly, and such declines often, although not always, kick off a bear market. The silver plunge did not, however, break down below silver’s long-term parabolic uptrend, and nor did it put much of a dent in gold. The April silver plunge is one of the main reasons I have been rather wary over the summer, despite gold remaining in its uptrend. I do not like flip-flopping one bit, and the fact that I have been obliged to sit on the fence for a while is a reflection of the confused state of the market – when it is possible to be clear and decisive, as it has been with the oil market, that is the way I like to be.

While the outcome of the current stalemate may not be at all clear, the parameters certainly are – a gold breakout above the clear double-top at $430, should trigger a pwerful rally and such a development will be a major buy signal. Of course, those traders who wait for such a buy signal will have to chase stock prices somewhat, but will be buying with the assurance that an important new uptrend is very probably underway. On the other hand, a break of the long-term uptrend currently at $390 will be a sell signal, for all but die-hard long-term investors. It does look likely that, along with other markets, gold will stall for time ahead of the US elections.

Clive Maund

Source: clivemaund.com [1]

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