This chart says it all:
This is the SPDR Gold ETF (NYSE: GLD).
As you can see by this chart, when the Moving Average Convergence/Divergence (MACD) indicator crosses while under the zero line, gold has rallied. This buy signal has shown up again this week.
For those of you who don’t know, the MACD indicator is a collection of three signals, calculated from historical price data like the closing price. These three signal lines are: the MACD line, the signal line (or average line), and the difference (or divergence).
The first line, called the “MACD line”, equals the difference between a “fast” (short period) exponential moving average (EMA), and a “slow” (longer period) EMA. The MACD line is charted over time, along with an EMA of the MACD line, termed the average line.
MACD shows a change in trend. When the red and blue line cross high above the zero line it is bearish, below the zero line it is bullish.
It is simple and useful.
Pennant Formation
Gold has been putting in a basing formation on lower volume for about a year now. The long-term trend is up. It has held above the $1,500-per-ounce mark all year and is now at $1,664 – putting in higher lows as it moves up.
The top, shorter-term downtrend line is about a month or two from hitting the uptrend line. This is called a pennant formation.
And when this happens the price breaks out one way or another. Like a coiled spring it launches as far as the trend went sideways. This is generally how gold moves – long consolidation patterns coupled with explosive short-term gains.
Given the amount of money printing and the accumulation of debt in the world, I would bet that the direction will be up.
Earlier this week Greg McCoach wrote a brilliant editorial projecting that gold will hit $19,525 an ounce before it is all over. You can find it below in The Cost of Debt: Debts DO Matter.
Now is the time to buy assets with real value. Gold, rare earths, and oil will all go up on inflation and the systematic destruction of all major currencies. Below you will find actionable information related to these assets.
Have a great weekend,
Christian DeHaemer
Editor, Wealth Daily
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