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Is Gold Ready for a Long-Term Break Out

Gold broke out to a 10 month high; although the reasons justifying gold’s breakout are still developing and anyone’s guess, the technicals are already ahead, asserts Omar Ayales, commodity sector expert and editor of Gold Charts R Us.

Our indicators have been telling us all along that gold was on the brink of a major upswing. One day the concern is runaway inflation and the Fed’s bloated balance sheet. The next is Brexit and concern over the collapse of Western civilization. The next is about continued and prolonged trade wars.

More from Omar Ayales: Top Picks 2019: B2GOLD (BTG)

Take your pick. They’re all relevant and for one reason or another, they’re all supportive of higher gold. They’re all under the “safe haven” umbrella. It’s now a stone’s throw away from a key multi-year-make-or-break resistance level near $1365.

This level has been reached on 4 occasions since 2013. On every attempt, gold rose from the pits, trying to revert the bear market trend that began in 2012 only to fail. The mega resistance level at $1365 is a strong one, and one that will not be easy for gold to overcome.

But if it does, by that I mean, a gold rise above $1365 on a 2dc would be a breakout, not only from a multi-year resistance, but out of a bear market.

The single most important thing about this is the shift in longer term momentum. How events that unfold on a daily basis become supportive of gold, rather than adding pressure.

See also: Manias, Groupthink and the Absence of Fear

Our individual gold shares are doing great. They’re all in the green with double digits. And although it might be tempting to protect some profits, I believe the best is yet to come.

B2Gold (BTG) has been one of our best holdings. Technically, the stock has formed a very clear uptrend since September. The top side of the up channel coincides with our first profit target. Our indicators are telling us that weakness was short lived and more upside is now likely.

Agnico Eagle Mines (AEM) has also been rising since September — and rising much more aggressively since November, and just reaching a new 6-month high.  The stock's coast is now clear to rise to the July highs near $48. Our proprietary indicator shows momentum remains up.