I've heard a lot about a supposed breakout from the 6-year downtrend in gold during the last few days with numerous articles and blogs posting a chart similar to this one:
While there is no doubt that gold is close to a potential key inflection point, I believe that the financial media has misrepresented (as often happens) the current technical picture for gold in an effort to get clicks from excited gold bugs.
First of all, the above chart is linear (arithmetic) which can often cause a skew on longer time frames. Second, the "breakout" which is being purported is marginal at best and is not yet confirmed on a weekly closing basis. Finally, if we use a 10-year weekly log-scale chart the picture looks a bit different:
Gold (Weekly - 10 Year)
For me to get excited about any long term breakout I would need to see gold clear major support/resistance near ~$1310 on a weekly closing basis. Until then the yellow metal remains in a long term consolidation (coil) which is building energy within a narrowing range.
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.