Gold Hurdles Above $1,140


"As gold climbed higher this past week, open interest on the Comex has soared."

Gold climbed $36 this past week, finally hurdling above resistance around $1,140.

Demand continues to drive gold higher, so look for $1,200 to be reached soon, which is an outlook confirmed by the gold chart. Gold's chart patterns remain very bullish.

Spot NY Gold Daily Closing Price

Look closely at the upper right-hand corner of the chart and focus on the trading pattern that gold has etched out in recent weeks. Gold has formed a clear "head and shoulders" (H&S) pattern; but look closely at the 'head' of this pattern. Unbelievably, gold has also formed another H&S pattern within the 'head' of the larger pattern.

H&S patterns typically signal that a base is being formed. So the patterns in the above chart provide visible evidence of the accumulation now occurring in gold. This chart is very bullish, but there is always reason for caution.

As gold climbed higher this past week, open interest on the Comex has soared. Clearly, the gold cartel tried to stop gold at $1,140 again; but this time they failed. However, if they continue to offer paper at the same rate, the gold cartel may shake out some weak players on the Comex, which could cause a correction in the gold price back to test support at the $1,140 breakout level.

In the final analysis, demand for the physical metal always drives the gold price. Consequently, if the paper shorts are unsuccessful in driving the gold price lower, they have to deliver metal, buy back their shorts or default.

A default would mean 'game-over' for the gold cartel and, as a consequence, the gold price would soar much higher to its free-market level. As the market is becoming increasingly aware from GATA's efforts that the gold cartel is a naked short, it is unlikely that the demand for physical metal will subside here. I expect that it will continue to grow. After all, what would you rather own? Physical gold, or a piece of paper purporting to represent your ownership of gold?

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