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$4,300. Uh, it's down 20% from its highs already, 21%. This looks like, if I were just to look at a chart from a purely technical perspective, some people have pointed out to me, it looks like the beginning of another 2012 style correction where we saw a top, it corrected a bit, maybe bounced back a little bit towards its previous top, failed to meet that top, then crashed into the 40-50%. It's happened twice now in the past uh two bull cycles, 2011 and also 1980. Is this time any different?
>> Well, there are a couple of distinctions that I think could support gold. The first part of your question was looking at the the gold price over time through the eyes of a technician, a chart, and a couple of studies. As you'll see when we pull up some charts, gold has effectively broken and stayed below the long-term 200-day simple moving average. To a market technician, we look at long-term trends of a stock or commodity in this case gold as to whether or not current pricing is above or below that moving average. It is below on a technical basis. Once it broke below on a daily chart, maintained that level, uh we moved at least short-term into a bearish scenario. We did find a bottom. The bottom we found was right around $4,045 and then it popped back up uh pretty dynamically. Of course, this happened last week. I do believe there's fundamental reasons we will see support in the market even at these elevated levels. Although, as you just correctly pointed out, 20% below that record high. I mean, we've come down substantially from well over $5,500 to testing right around uh $4,100. That's a substantial move, but there are a couple of key uh reasons I believe it could be supported. We'll go into that. But to answer your question, yes, we've sustained technical chart damage. We are definitely in a correction. Could this correction lead to the type of scenario that we saw back in 2012, which was a multi-year correction? Uh really halfing the price of gold from about $2,000 down to about $1,200 at the end of 2015. And I remember that point well because as it came down, we were wondering where it would find support and the report that came out in February was George Soros was actively buying which gave me the belief that there is a possibility that this could be a bottom that it finally went to a price where professional traders, hedge funds felt this is the point to re-enter to buy the dip because it's priced correctly.
Okay, let's take a look at the chart then. Please uh pull up a chart on your screen. We'll take a look at the technical levels and try to understand why $4,000 is a critical support zone and whether or not $4,300, which is where we're currently sitting at, uh means more consolidation or more of a breakdown up ahead.
>> Absolutely. As you can see, what I've pulled up is a a daily chart of a continuous futures contract of gold. You can see that on Thursday of last week on the 11th of June, we actually touched the bottom of this green line, uh, $4,045. That was short-lived, though, as you can see, after hitting this all-time record high up here. That came in, of course, at the end of January. We hit a series of lower lows, the first one, the second one, and then the breakthrough here, the third one. I've got green arrows showing that they were support in this area. You can see the red arrow signifying that I believe it's currently resistance. The other thing that we want to look at is I have two moving averages up. The green moving average, which is my shorter-term 50-day, and the longer-term 200-day. You can see as they widened that's when we were releasing a huge move and realized by the nature of using moving averages they lag greatly behind real-time data, especially a 200-day and a 50-day, but you can see how these have narrowed tremendously narrowed where the 200-day and the 50-day is coming closer. If it actually would cross that would be a significant level of chart damage, but we're not quite there yet. My sense is that I believe that around $4,000 will be a floor in gold and it's simply based upon the low that we saw last week. And if we carry that back, you can see that this was also an area of support. We could move it back a little bit further and then the if it did slip lower, that would be the next level. But right now there's some data, not exceedingly strong data that suggests on a technical basis because of this bottom here that this could be the floor. My assumption right now is it's going to be, and later on I'll explain why I believe that to be in terms of fundamental events.
Well, Gary, the if you take a look, I don't know if you're able to zoom out a bit and uh look at more time history, but if you take a look at how the prior bull cycles have ended, uh historically, gold has corrected a lot more than it has currently before troughing uh before reaching a bottom.
And >> uh how far do you want to go back, David? Let's just take a look at 2012, 2011 um and uh show us how far it's declined from the peak in 2011 to the trough in 2012. And I want to draw that parallel to today and see if uh a similar price action is going to occur.
>> Now, of course, it's it's to scale, but not to scale. Let me um >> I believe it's 40% if my memory is correct. >> Yeah.
>> Well, you can look here. uh you're looking at about call it $1,900. >> And from $1,900 it moved down to $1,200, continued to drift lower to the is this yeah the this is the end of 2015 so this is the low. >> I'm going to round down to a,000. So from $1,900 down to $1,440 is well over a 40% retracement from this the former all-time record high. This occurred in the middle of 2011 down to these levels that really ended in 2015. Then we saw a slow move up first to $1,300. A correction down to $1,000, would stay the same. It would bottom at around $1,175 and then this was the first of many peaks at $1,441. The reason that's so important is that comes just above this former record high. So, we had a new all-time record high. It came back down. We matched that record high not once but twice. So, we literally had a triple top. It consolidated. And this little box here is simply to signify the point in which everything changed. Look at the tact or the angle of the rally. really beginning in August of 2023 when gold would move from about $1,900 and it would stop along the way for a short time. It's highly compressed $2,400 here, $2,700 here. These are all all new all-time record highs. We, you know, we would witness that once a week or something at one point. Then we had this top at $3,400. This top here at $4,000 and of course the all-time record high which actually goes uh I'm looking the wick is very light but almost to $5,600. I always say above $5,500 and then we had this deep correction. When you look at the correction, even if we look at it from $4,000 to $5,500, it came down about 60% of the way. So we've had we have had really steep corrections. The correction that we're looking at now is nowhere near as deep as the move from $1,900 multi-year down to a thousand. Uh to do that we would have to go from call it $5,500 down to just below $3,000. And the low that came in where I'm looking at potential supports, $4,000. If this area holds, and that's a big if, but if it holds, um, it will be a much more shallow correction than many other instances in which gold traded to a new all-time record high and corrected. And I think the key difference right now, it's not the war in Iran. They've kind of put that to the side, believing now we have a peace agreement. We'll see if it holds, but that that would be something that would be contained and short-lived. So, that wasn't it. We do have inflation, heavy inflation, 4.2% from May as reported in the last CPI. However, that was 60% of that was based on higher energy and crude oil has fallen out of bed. It is really coming back down. I would look for it if it's not there already uh to go back to around $80 and $80 being a benchmark. The key right now, David, more than anything else is the acknowledgment, and this is from the World Gold Council, uh, that the biggest purchasers of gold this year that are going to be actively accumulating gold are the central banks. I forget the actual numbers but according to one article uh they said that they interviewed uh a lot of the central banks and the survey found that 57% of the respondents are now switching gold from where it's being located for for safety reasons, but they're active buyers. The central banks are believed to be will be are believed to accumulate vast amounts of gold over the next year. And that's according to a survey by the World Gold Council to all of the central banks.
>> And so the central banks are large purchasers of gold. That's not like retail investment. It's not even like hedge fund investment. When central banks are buying and they're converting their fiat into that that hard asset, one, that tells me that they're losing faith in whether whether they're overseas working with euros, whether they're in China working with Yuan, regardless of their local currency or the currency that's a primary currency in the central bank. The fact that it is such a high percentage of central banks that responded saying we're going to be actively uh buying and adding gold to our positions. To me uh that is significant. That's the most significant thing that I believe if anything has the opportunity to move gold back into the positive. And when I say the positive, uh, once again, I'm just looking at the chart and I'm talking about it moving back above uh, $4,000, which was a low that we hit $4,045 last week. And that's basis of futures contract, not spot.
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