June is Bustin' Out All Over
Last time I noted the one item whose price change stood out while I was on vacation: gold. Since a picture is worth a thousand words, let's take a look at this chart of gold:
Look at the right hand side of the chart. See how the price has exploded during June? Before that, there's a lot of "chopping" up and down. But in June the price has had two dramatic rises.
The first lasted a bit more than a week. You can see how after that initial rise, it chopped back and fort a bit. That's known as "consolidation." The price rose too far too fast.
After that, it rose even more dramatically. It looks like a pole rising out of the earth straight up to the sky. Of course, no price grows up to the sky without at least resting a bit. And when it rises this dramatically, it will frequently correct by dropping down a bit. Indeed, that's what's happened today. The price of gold dropped over $20.
If you look at the top part of the chart, you can check RSI" or Relative Strength Index. It measures the speed and change of price movements. See the green areas above the two June price rises? The second one is much more prounounced, reflecting that steep rising pole.
That first thrust up took us close to the previous February high. On its own, it didn't necessarily signal anything of great import. We've been there before, and fairly recently. No big deal.
The second thrust, though blew right through $1,400. That should catch our attention. Something different's going on now. It's not just a bounce.
First of all, any "round" number like $1,400 typically provides resistance to further price rises. It's like a high hurdle. You'd typically find an item try a few times to push past it. But this time, again, gold blew right through it the first time around (at least the first time in long time). So now we're not at a previous high in February, we're at 6-year high. That's a big deal.
This picture shows us that we may be looking now at a resumption of the gold bull market that extended from 2000 to 2011. It may be confirming that the price action from 2011 to the present was a correction of that initial bull surge - which, by the way was historic in nature: 10 years + or consistent price rise without any down years is unheard of. So we shouldn't be surprised that the correction of such a historic rise would last so long - almost 8 years.
So if this chart paints a picture of a resumption of the next leg up in an extended gold bull market, don't be surprised.
By the way, this all reminds me of song from the Broadway musical "Carousel" by Richard Rogers and Oscar Hammerstein. Here's a jaunty performance from the British Proms. Enjoy!
Look at the right hand side of the chart. See how the price has exploded during June? Before that, there's a lot of "chopping" up and down. But in June the price has had two dramatic rises.
The first lasted a bit more than a week. You can see how after that initial rise, it chopped back and fort a bit. That's known as "consolidation." The price rose too far too fast.
After that, it rose even more dramatically. It looks like a pole rising out of the earth straight up to the sky. Of course, no price grows up to the sky without at least resting a bit. And when it rises this dramatically, it will frequently correct by dropping down a bit. Indeed, that's what's happened today. The price of gold dropped over $20.
If you look at the top part of the chart, you can check RSI" or Relative Strength Index. It measures the speed and change of price movements. See the green areas above the two June price rises? The second one is much more prounounced, reflecting that steep rising pole.
That first thrust up took us close to the previous February high. On its own, it didn't necessarily signal anything of great import. We've been there before, and fairly recently. No big deal.
The second thrust, though blew right through $1,400. That should catch our attention. Something different's going on now. It's not just a bounce.
First of all, any "round" number like $1,400 typically provides resistance to further price rises. It's like a high hurdle. You'd typically find an item try a few times to push past it. But this time, again, gold blew right through it the first time around (at least the first time in long time). So now we're not at a previous high in February, we're at 6-year high. That's a big deal.
This picture shows us that we may be looking now at a resumption of the gold bull market that extended from 2000 to 2011. It may be confirming that the price action from 2011 to the present was a correction of that initial bull surge - which, by the way was historic in nature: 10 years + or consistent price rise without any down years is unheard of. So we shouldn't be surprised that the correction of such a historic rise would last so long - almost 8 years.
So if this chart paints a picture of a resumption of the next leg up in an extended gold bull market, don't be surprised.
By the way, this all reminds me of song from the Broadway musical "Carousel" by Richard Rogers and Oscar Hammerstein. Here's a jaunty performance from the British Proms. Enjoy!
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