The most important thing revealed by our long-term chart for gold, which goes back to the beginning of its bull market, is that its uptrend to date has been steady—there has been no parabolic blowoff move, and certainly no melt up—that is believed to lie ahead of us and it will mark the final climactic phase of this bull market that will lead to the latest fiat experiment being consigned to the trashcan of history. If it is just starting now, we could see some real fireworks shortly; but, as stated in the Silver Market Update, you should be careful what you wish for because such a melt up would be expected to synchronize with an all-out dollar collapse, which the Fed and Wall Street banks have worked tirelessly for years to bring about—the Fed has, in fact, now painted itself into a corner, which is why it cannot follow suit when the European central banks raise rates to head off inflation.
It CANNOT raise rates, because if it did it would collapse the debt-wracked U.S. economy and bring the major Wall Street banks' derivatives pyramid crashing down. So, it has decided on procrastination and what for it and its cohorts in kleptocracy is the best option, which is to allow the dollar to go down like a lead balloon, which at least serves the purpose of defrauding foreign creditors out of fair value for their holdings of dollar denominated securities, especially Treasuries.
So it was very interesting to see gold finally follow silver's lead by zooming ahead on Friday, as we can see on our 6-month chart, and while it is possible that both it and silver are putting in an intermediate top, especially with gold now being very overbought on a short and medium-term basis, the latest COT chart for silver, which is strongly bullish despite silver being fantastically overbought, suggests a continuation of the melt up in silver and thus a possible melt-up phase for gold, which could lead to its exceeding our $1,700 target zone by a country mile.
With gold well into critically overbought territory on its RSI indicator it is reasonable for it to take a breather early next week to digest its latest gains and we can expect that. Then we will watch to see if silver can vault above its key $50 resistance level, which will have major implications for gold (and the dollar).
Silver Market Update