Monday, January 13, 2014

If Gold Breaks Below THIS Line, Watch Out!

Where is the line in the sand... the technical uptrend, that if broken would decisively end the secular Gold bull market?

Mike Shedlock (aka Mish) of Sitka Pacific Capital Management puts it at around US$1000 on the monthly chart (source):

BofAML's Macneil Curry says a breakdown below $1180 will see critical long term support at $1087-1127 tested (source):

(click chart to enlarge)

Martin Armstrong says the 'Monthly Bearish Reversal' lies at 1152, below which a monthly closing will open the door to a further decline, potentially to technical support at $875 (source):

(click chart to enlarge)

GM Jenkins from Screwtape Files says Gold needs to hold a weekly close $1215 if the fundamental [sic] long term trend line is to remain intact (source):

(click chart to enlarge)

Greg Guenthner of Daily Reckoning thinks we've already dropped below an important technical level and the price is heading lower (source):

And finally, to revisit a previous bull market in Gold, here is the important technical level that was broken in the 1970s, which had no bearing on the final outcome (source):

(click chart to enlarge)

While charts can be useful for perspective & timing, I think it's important to remember that it's the environment and events yet to play out that will ultimately determine the fate of Gold, not a line someone has drawn on a chart.

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  1. Shervin D'AguiarJanuary 14, 2014 at 9:39 PM

    I think if $1180 goes then we will see it drop like a stone to $1000. With sentiment as bearish as it is in gold, I'm inclined to say that it has bottomed here. On a fundamental basis, a weaker US economy in 2014 would support gold as the Fed would probably stop tapering asset purchases.

  2. Could do, that's what we saw when it plunged through support at $1500. I don't think t/a is without value, I just don't think it can tell us (in advance) when a secular bull market is over.

  3. Absolutely we should bring it back! And good luck with that request. It will be a similar response that Germany got last year from the Fed. No chance!

  4. How else would you make the call that a bull or bear market has ended other than using a chart BB? Also, you could argue there are three trends in the 1970s gold chart listed.
    Nice piece though!

  5. I guess my point was more so that one can't predict the end of a bull market based on one trend line breaking. But it's a good question and would probably be answered differently by different people. For example one couldn't have known that Jan 1980 was the end of the bull market until looking back on it retrospectively. It's easy to tell now, but even in the few years after 1980 it would have been impossible to tell for sure that the secular bull market was over.