Gold Update (Golden Cross)

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On December 14th, in a post that can be found here, we wrote that gold, trading at the time around $1246.20, was a low risk buy and we turned out to be correct. Then again on December 28th in a piece entitled “Gold and the Black Swan” which can be found here we reinforced the possibility that gold may go even higher and why that could happen soon. In that post we wrote, “The take away is this; gold rallying along with the fight to safety currencies may indicate economic stress and a possible recession, but gold taking off on its own, could mean a black swan event, not just a recession. That is not what we were looking for in our December 14th post. It is now.” So far it has not moved above the $1300.40 high that was made on January 4th but a recent technical event further solidified gold may be coiling for another move higher.  

Golden Cross

A golden cross has triggered on the charts and many people see this as an extremely bullish sign. A golden cross is characterized by the 50-day moving average crossing above the 200-day moving average (see chart). 

It is not an infallible pattern, and often times price will move back down to the area of the cross which is about $1254, prior to resuming the uptrend and making new highs, but given the fundamental possibilities we have already laid out, buying the dip may be a good medium-term strategy in gold. 

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