Gold…the safe haven?

Every time I turn on the news recently, there is an analyst promoting the purchase of gold.  The biggest reason given for the purchase is the ‘Safe Haven’ argument…meaning that in times of economic strife, gold tends to rise.  While fundamental arguments can be made for and against gold, let take a look at some of the charts and what they are telling us about the future value of gold. 

 

The 1^st chart is a long term monthly chart showing the steady uptrend in gold over the years.  Notice the acceleration of the uptrend over the past years.  If current levels do not hold, it is likely to see a return to the longer term trend line.  

 

 

The next charts show several gold mining companies under considerable selling pressure.

 

 

Finally, let’s look at the US dollar.  The long term downtrend in the dollar has been broken.  As investors continue to buy dollars, it can be argued that the demand for gold as a safe haven investment will begin a significant decline.

 

 

 

 

Bottom line…if gold has failed to rally significantly during these times of global economic strife, where will the demand come from when global economies begin to rebound?

 

Happy Trades!

 

Jeff