X

Gold Looks Ugly

This could be an ugly week for gold...

This could be an ugly week for gold.

After peaking above $1560 per ounce in early September, the price of gold has been slowly and steadily declining. It closed Friday at $1,488.

That’s not a big decline – only $72 an ounce, or a little less than 5%. So, nobody’s panicking yet. But, the problem is this decline over the past six weeks has created a rather ominous looking chart pattern – which may be a prelude to a much larger decline.

Take a look…

At the end of September, gold fell below the support of its 50-day moving average (MA) line. This is a bearish development and often leads to several weeks of down-trending action. Many times, though, when a chart has broken below the 50-day MA, it will come back up and test that former support line as resistance before starting a more significant decline.

That’s exactly what happened with gold. After breaking below its 50-day MA a couple of weeks ago, gold bounced back up to test the line as resistance. Resistance held. And on Friday, gold turned lower – which looks to me like the start of a new decline phase.

Notice how all of the various moving averages have coiled together in a bearish configuration – with the 9-day exponential moving average (EMA) trading below the 20-day EMA, and the 20-day EMA trading below the 50-day MA. Energy is building for a big move. And, with this bearish setup, I suspect that move will be to the downside.

That’s bad news if you’re already loaded up on gold. But, it’s good news if you’ve been waiting for a chance to buy.

The long-term case for owning gold is still as bullish as ever. Gold is in a long-term bull market. The decline over the past six weeks, and the decline I expect to come, is simply a correction in that bullish phase. So, any sharp decline from here will be a chance for investors to increase their exposure to gold.

The most obvious support level is down around $1,425 per ounce. That looks like a good place at which to start buying.

Best regards and good trading,

Jeff Clark

P.S. Most of you know me as an options trader. After all, it’s what I’ve built my career on and what allowed me to retire at 42. And a good number of you are profiting on my options recommendations each week.

But recently, I found a new way to make even bigger profits… without ever touching options.

I want to share all the details of this strategy with you on Wednesday, October 23, at 8 p.m. ET. You can reserve your spot for this special presentation by signing up right here, and I’ll even invite you to a special training series to help you prepare.

Reader Mailbag

Today, a Delta Report subscriber comments on the service…

I really enjoy your work and it is paying off. I’ve been trading options for a very long time, but pursuant to your guidance and teaching, I have learned why I haven’t been more successful along the way. Thanks for that education. I want to comment on what I believe is a huge plus to your subscription, specifically using option trading in the Delta Report

I have always been impressed with your candor, level-headedness, and overt concerns for everyday folks. I have been self-employed for 44 years, am very cognizant of “risk,” and really respect your obvious value system. I don’t begrudge anyone making money, BUT when oversubscription removes and ruins the value of that subscription for the member-users, that is too much. I hope you remain loyal and aware of that potential possibility.

Best to you, keep up the great work. I’m in this with you for the long haul!

– Jim

Thank you, as always, for your thoughtful comments. We look forward to reading them every day. Keep them coming at feedback@jeffclarktrader.com.