In our previous essay we took a closer look at the situation in silver and mining stocks (precisely: SLV and GDX ETFs) and discussed how it may translate into the precious metals market. As we wrote in the summary:
(…) when we factor in the impact of (…) silver's cyclical turning point, which is just around the corner, and the fact that the short-term resistance lines have already been reached in case of the GDX ETF, we can presume that the top of the recent upward move in the precious metals may be already in (or is very close to being in).
After that essay was published, silver moved slightly above the medium-term declining resistance line on an intra-day basis, but didn’t manage to hold these gains. Therefore, it's quite possible that we have already seen the impact of silver's cyclical turning point on the white metal. Additionally, the GDX ETF quickly invalidated the breakout above the 50-day moving average and the 38.2% Fibonacci retracement level. When we take into account the recent price moves in both, we can conclude that our projections from the previous essay’s summary remain in place.
These circumstances have encouraged us to focus on the most interesting asset – gold. Does it confirm the indications for silver and mining stocks? To see what we can expect in the gold market, let us move to the world of charts. Today, we will start with the yellow metal's very long-term chart (charts courtesy by http://stockcharts.com.)
Click to enlarge.
Once again, we see that the situation hasn’t changed much from this long-term perspective. It was bearish as gold had already broken below the long-term rising support line and this breakdown wasn’t even close to being invalidated this week.
Please note that in 2008, when gold moved higher before plunging for the final time, there were several intra-week attempts to move higher after which gold finally declined. Therefore, a double top pattern should not surprise us here.