Gold Breakout: Key Levels to Watch Now …

Our Edelson Institute cycles forecasts are right on — again.

Earlier this year, they signaled the recent gold surge. More recently, they nailed the gold price correction underway. And I have every reason to believe that our forecast for the next big surge in gold will also be spot on.

For specific guidance on the strategies that can transform this kind of foresight into significant wealth, please refer to the 48-page transcript of the Institute’s emergency conference. You can read it online or download from this private, subscriber-only web page.

Just look at what’s happened in the last few trading sessions: Gold hit a three-week low after this week’s Fed meeting. And many gold bulls are convinced that this is the buying opportunity they’ve been waiting for all year, but I say: Not just yet.

True, it’s usually a good idea to add to your gold holdings at a discount.  But when it comes to buying commodities, right now patience could be as precious as gold itself. In a moment, I’ll explain why …

But first, the big picture: As you can see in the long-term chart (below), gold decisively broke out of its long-term downtrend recently. A downtrend that had been in place for five long years.

This signals that a new bull market in the yellow metal has arrived at last.

I have no doubt: Gold prices are headed much higher in the years ahead.

We predict a target of $5,000 an ounce. And that may prove to be conservative.

But nothing moves up in a straight line.

The most-active December gold-futures contract traded as high as $1,354-an-ounce (on a daily closing basis). Then it ran smack into overhead resistance that stretches from $1,350 up to $1,375 or so.

And I wasn’t one bit surprised. In fact, our short-term cycle forecast was spot on predicting the correction ahead of time. Only AFTER the correction will we get the next big move higher for precious metals later this year.

Plus, there are two other good reasons why you should keep some powder dry and wait a bit before adding substantially to your gold holdings …

First, gold has advanced about 15% year-to-date, and surged more than 9% just since early July. It needs a pause to refresh.

In fact, after an important breakout like this, markets often come back to retest that breakout, before zooming even higher. For gold, that means you should watch for it to retest the $1,280-to-$1,300 level.

That zone served as resistance for gold multiple times this year. And now that it has broken above this level, it should serve as key support on a pullback. If gold cannot hold that level, then a steeper correction is possible over the next month or so.

But either way, our Edelson Institute cycle forecast indicates gold should put in a bottom by October or November at the latest.

Second, along with gold’s recent breakout, I noticed a spike in bullish sentiment. More than $1.6 billion flowed into gold-backed ETFs as of the end of August, just as the yellow metal was poised for its breakout move.

And speculators in gold futures have a larger net-long position now than at any time since this time last year. Which, by the way, came just before a 14.5% pullback in gold during the fourth quarter of 2016.

In my experience, the best time to buy gold is when nobody wants it, or better yet, investors are unloading it. We’re not there yet.

Upside resistance for gold lies at $1,355, as I noted above, with even more important resistance at $1,366 to $1,375. This is a key level I’ve been watching closely all year.

A monthly close above this pivot point would be bullish, signaling a possible upside target of $1,700 for gold. But for the reasons just mentioned, I would assign a low probability to this outcome.

Bottom line: Sentiment and our cycles research both suggest that now is not the time to get too excited about gold. The good news is: The deeper the correction now, the better the buying opportunity later to add to your gold holdings at more attractive prices!

Good investing,

Mike Burnick

Leave a Reply

Your email address will not be published. Required fields are marked *

Comments 14

  1. Phil Issenberg September 22, 2017

    Re:SBGL, The only question is $4.07 is sitting as a stop loss. This goes back to the opportunity that presented itself back in May. The warrant was oversubscribed and I managed to pick up an additional 586 shares. Should the stop loss be removed? Lowered? If I hear correctly, the opportunity to purchase more may be around the corner again. ? If the market goes in the wrong direction for this stock what do you recommend for a stop loss, or is $4.07 the right place??????

    Reply

  2. Jaro Barvik September 22, 2017

    Mike, I hope you will not let your subscriber to miss the golden opportunity like Larry did on 1/16. the true is that you don’t know where G is going and when. Long term it is obvious to even amateur like me. But all those technical have a lot of variables to be able to figure it out. You are selling your predictions but it is worthless. The same like Jon Markman is telling his readers that if you bought DPZ ten Y/A for $2.5 you would be a millionaire. Nice try Jon but guess what? I was his subscriber at that time and he never mentioned DPZ or even APPL! I wonder if he did buy it? So I am that clever as well to find out stock with 7000+ gain and play genius! All BS

    Reply

  3. Jim Cochran September 23, 2017

    When is government going to start prosecuting the manipulation of silver and gold by the central banks? I am aware of fines and prosecutions in Europe and the techniques used to drive prices down during time of relatively low volume. It is criminal and not a “free market”. You can see it happen everytime gold makes a run but when volume slows here it comes a big one time plunge.

    Reply

  4. vijay nayyar September 23, 2017

    Seems reasonable. I agree some time from here to end of October to February 2017

    Reply

  5. H. Craig Bradley September 23, 2017

    GOOD TIMING IS GOLDEN

    Gold is volatile. Its has long term cycles, often longer than anyone can imagine. I have read people’s past recommendations which would have not been profitable unless you are a frequent trader. For buy and hold types, its a waste of time. Besides, any gains are flat taxed by the Federal Government at the 28% Collectible Rate. Gold is a good hedge, especially physical gold, but the markups to buy or transact it are too high to make money in these tiny moves up. Besides, hardly anybody can time markets successfully anyway. Fools game.

    $5,000/ ounce WON’T Happen until the average guy on the street has completely lost confidence in our Federal government and ALL of its politicians. That has not yet occurred. Until it does, gold will be unlikely to surge significantly higher or sustain a large “breakout”. If you wait until there is real panic and a complete loss of public confidence in the Government of the United States, as a country, then physical gold probably will not be available at any price, or only in tiny quantities ( couple of Golden Eagles) with a high premium added by the Dealer to the spot price.

    Reply

  6. James September 23, 2017

    Are we in a kondratieff cycle with regards gold? A 45 to 60 year cycle in which there is a boom in leveraged etfs, unleveraged etfs, mining stock, futures and options. What we need to look at is whether we should purchase call options or put options? Put options have both systematic and unsystematic risk. What’s for sure is that we are headed for another boom? The Dow Jones is rising. The SandP has upgraded the credit rating to triple A plus, this is gonna be a big boom in zinc, copper, aluminium, and ultimately the precious metals silver and gold. Let the boom begin.

    Reply

  7. Pen Name September 23, 2017

    The above article on near-term Gold price prospects is self-contradictory and wrong ! It states that the $1280 to $1300 price area must first be tested, thereby neglecting the fact that it has already been tested this week by reaching a low of $1,288 and subsequently rebounding sharply to close this Friday at $1297.60 in response to the sharply rising Geopolitical Tensions created after President Trump warned North Korea of complete destruction and the subsequent vehement reaction by the North Korean Leader calling Trump a “dotard” and also its Foreign Minister who threatened to explode a H-Bomb high above Japan using a ICBM; the Russian Federation also warned President Trump against attacking North Korea, and also warned the U.S. that Russian Federation Troops are now fighting side-by-side with President Assad’s Troops in Syria with the intention of destroying ISIL fighters and also Syrian Rebels backed by the U.S. “Advisors” ! Then, last night in his Alabama Speech, President Trump scolded North Korea by stating that a H-Bomb test above the Pacific Ocean would spread Cancer due to that radiation, but didn’t mention possible EMP damage to Earth Communication Satellites now circling the Earth! Obviously based on this new weekend development , the Gold price will move sharply higher when Gold Trading resumes on Monday Sept 25, and a close above $1,330 on Friday Sept 29 would be extremely Bullish on a Quarterly Closing Basis Chart according to an Analyst’s article published on kitco.com yesterday afternoon ! Obviously then, the analyst writing the above article has been caught on the wrong side ! Moreover, my Spot Gold Chart recently shows a breakout above a triple top at $1,290 giving a V-Count of 9 and a H-Count of 16 to thereby provide Spot Gold Price Objectives of $1,440 and $1,600 , respectively, likely reached by Nov 3, 2017 and by Feb 9, 2018, respectively ! So get on board with a Long Position in Spot Gold this coming week before $1,330 per ounce is surpassed ! Sept 23, 2017 at 4:32 a.m. PDT..

    Reply

  8. James Coe September 23, 2017

    You nailed oil this month, made 250% twice on USO options, but my favorite was the 600% gain on 4c options, sold for 28c… that’s $1200 gained on $200 risked… my advisor was short oil, said there was no way oil would break $50… he isn’t easy to impress, but that was fun!

    Reply

  9. dmazur7 September 24, 2017

    I’ve read somewhere recently (within last week or so, or at about $1,320.- /oz) that gold manufacturers are rather frantically hedging against further gold price decline. Are you following this hedging scenario and what conclusion should be wise in respect to it?
    Respectfully,
    D.M.

    Reply

  10. David R(Canada) September 24, 2017

    It appears that many investors who believe the US dollar is going to drop quite a bit more yet, are piling into Bitcoin instead of gold. How long will this last and how big a difference will it actually make?

    Reply

  11. D. A. Grgurich September 25, 2017

    Might I offer a comment? I have been a member for several years and have invested in gold during that entire time. There is much ado in this issue about how well your gold assessments have done compared to reality during the last few weeks. I would like to point out that I have watched and waited for several years to see when it would be time to “back up the truck” as Larry used to say, to prepare for the future. From the comments this month the time has still not arrived although the gold price is almost $300 per ounce higher than it was a few years ago. Fortunately, I was buying gold then and am in very good shape now. In fact, I may sell some.

    The focus of your analysis, now that Larry is gone, seems to be that of a gold trader. I do not believe very many of your subscribers are involved in that game. I buy gold to protect our finances against the future and wanted to establish a position at the lowest possible cost. To that extent, I am now positioned more or less where I want to be (which means I did buy against Larry’s recommendations although I had great respect for the man) and the chitchat about last week or next week means nothing to me.

    I think you need to think long and carefully about who your subscribers are. Sooner or later they will wish that they were already in the gold market because the consequences of not being there will be severe. Are you doing them a service by not recommending that they get established for the long term now? Isn’t there some room for altruism in your “industry”? I think Larry, with current world events moving as they are, might have pulled the trigger already. He will be missed.

    Reply

  12. siggyski36 September 27, 2017

    What is Ressitence & Support for Silver?

    Reply

  13. Ernie October 2, 2017

    This is an interesting time. The financial situation is really scaring me. I am 84 now and have followed the markets and the precious metals response to two major cycles and am getting prepared for #3. I have had some very successful buys in my time but also have some bad moves. My major concern now is protecting my assets and I believe precious metals ownership will help very much.

    Reply

  14. Michael Vore October 13, 2017

    I was told that Gold would hit 1600.00 an ounce, which I disagreed with! What would you invest $200.000 right now?

    Reply