Wayne Wile: Technical Indicators Still Positive for Gold

Gold took a kicking over the long weekend. It had moved too far too fast, was overbought and needed a correction.

Gold took a kicking over the long weekend. It had moved too far too fast, was overbought and needed a correction. But that’s all it is, IMO.

I don’t use a lot of technical indicators, but every once in a while you find one that seems to work. In gold, it’s the 50 week moving average. Why does it work? Only a complete moron would spend more that one second contemplating that question. Probably it works because everyone thinks it does. There are no reasons for these things.

So, here is the chart of the 50 week moving average for gold going back to 2008. When gold got in gear and the bull market resumed, gold traded consistently above its 50 week moving average. When it broke down in late 2012 and slipped into a bear market, gold consistently failed to break above the declining 50 week moving average. Until this year. After last weekend’s bloodletting, it’s still comfortably above the blue line. For my money, gold is in a new bull market until it breaks below that line.

By Wayne Wile

Wayne Wile is an international investment consultant who has more than fifty years of experience working in various financial markets, as well as in the resource industry. Wayne has provided strategic consulting services to mining companies and high net worth investors. He has also been the author of many articles on gold trading and other resource investment related topics. Wayne Wile currently lives in the Cayman Islands.

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