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Has Gold's Uptrend Been Broken?

Topics [ gold bull market gold prices ]


There has been a lot of discussion around gold breaking through its 200 day moving average, with a focus on whether this means the gold bull market is over or whether it is just a correction.

The chart below from Nick Laird of Sharelynx puts the recent price drop in context. What make this chart different from other long term charts of the gold price is that the y-axis is on a logarithmic scale, which is an easier way of showing percentage (or exponential) increases.

The chart shows that the recent drop is still within the general uptrend band gold has formed over the past ten years. It is possible for gold to correct down to around $1,250 and for the bull market to still be intact, which would be a similar to the correction that occurred during 2008.

Gene Arensberg recently commented on gold’s correction by noting that he “… was laughed at in New Orleans this year (in October) when I said in a panel discussion that I wouldn’t be surprised if gold tested $1,250 at some point … The point was in the event we got into another major rush to liquidity, like in 2008, I thought there could be that much volatility, depending on the degree of panic.”

The silver trendline logarithmic chart looks very much the same as gold (a subscription is required to access the link, but you can sign up for a free trial here).

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