Gold Bearish Double Top Pattern?
Source: The Market Oracle, Roland Watson (2/23/09)
"The main question for precious metals investors this week is whether gold is about to form a massive double top."
I do not intend to sell any gold holdings tomorrow since I am in it for the longer run but the chart is warning of a break down to the lower channel line of $875 - at least. You can be sure silver will follow if gold breaks down here.
When gold hit $1000 for the first time ever on Friday March 14th 2008, silver hit a high of $20.88 but now it can only muster about $14.50 when gold breached $1000 again. Why the dismal performance? The answer is because silver is a more recession sensitive metal compared to gold and decrease in industrial demand is acting as a dampener on the silver price. As said before, when the unemployment figures peak then, and only then, does silver become a multi-year buy. What is going on just now is a trader's market.
Our strikes rule is still in place as silver skirts just above its own upper channel line. We simply await the breakdown of this multi-month rally.
The stock markets are now breaking below their November lows, and we expect a new descent to ultimate lows perhaps in June. In terms of probabilities, that will pan out as an Elliott impulse wave; though we must be wary of a possible ending diagonal formation, as well. Expect the buying opportunity of a generation when this bottom hits!
As an addendum to that weekend update, one can see that we foresee no Great Depression II here, though one will certainly follow in a decade or more. But once the bottom hits for general equities, we foresee another multi-year bull market going into the 2020s; at most though the force and vigor of it will not be as great as the 1980-2000 bull, which was in a class of its own.