After large declines markets have a habit of putting in bottoms which very few are able to take advantage of. Last night in thin Thanksgiving night trading gold fell to $1170, its lowest level since February, before reversing higher and briefly vaulting back above $1190:
The situation from a 'levels' standpoint is pretty clear: $1170 now becomes important short term support, $1190 clearly represents some resistance with a much bigger level of resistance (former support and key Fibonacci level) above near $1210.
Yesterday on the CEO.CA 'index' channel I made some comments regarding the potential Indian ban on gold imports. Here is what I said:
"I'm not sure of the implications of an Indian ban on $gold imports. However, if we look at other bans on things they usually raise the price of the banned item, not lower it. I would also guess that if the government follows through with a gold ban it will weigh on the rupee as a gold ban is a desperate move.
The marginal $gold demand that determines price is in the investment arena and expressed via futures and ETFs. The India story is virtually irrelevant in my opinion. In fact, the fact that the 2nd largest country in the world is considering banning gold imports due to overwhelming demand only adds to the long term bull case for gold.
The $gold price is driven by investor psychology and perception. Trump has created a perception among investors that has proven bearish for gold in the short term. I believe that gold will make new all-time highs during Trump's tenure as the current perceptions are turned upside down."
A banning of gold imports by the 2nd largest country in the world that has historically had a massive inflation and currency devaluation problem is a strong vote of confidence in the power of gold. The long term picture has actually never been stronger for the yellow metal and the past few weeks represents a perfect storm to shake the gold market to its core. Long term investors will do well adding to precious metals positions here.
DISCLAIMER: The work included in this article is based on current events, technical charts, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The views expressed in this publication and on the EnergyandGold website do not necessarily reflect the views of Energy and Gold Publishing LTD, publisher of EnergyandGold.com. This publication is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions. Junior resource companies can easily lose 100% of their value so read company profiles on www.SEDAR.com for important risk disclosures. It’s your money and your responsibility.
