Gold’s Technical Outlook After 50% Fibo Retrace
$GLD, $ABX
When Gold began trading in Asia Monday, we saw it fall to a low of 1,109 oz, the price has not been down there since Y 2010.
For those of us who take into account Fibonacci (Fibo) retracements, a method of technical analysis for determining Support and Resistance marks, this fall in Gold’s price represented a 50% Fibo retracement from the 1,921 from the high on 9 June 2011.
If you are interested in Gold pay attention to this 50% retracement level that was tapped Monday, because as that mark is broken, which it has as I write this (1,104.30 or 2.44%) the Southside move will open to the 38.2% retracement, which has a price mark at about 890
The Key reason for that fast fall in the Gold price was the fact the PBOC disclosed the country added 604 tonnes of Gold to its reserves in the past 6 years, which have a value of about $22-B now, after rising during the 6 years that lead up to Y 2009 by 454 tonnes.
The market was disappointed as it expected an important accumulation of Gold.
This does not mean the Chinese central bank could not, will not increase over the medium term their Gold supply as part of their reserves taking into account their goal of raising the RMB Yuan to the status of a world-wide reserve currency.
For long-term investors in Gold this appears to be an opportunity.
When the investment category shows signs of being out of favor by the mainstream is it often a good time to buy, aka the contrarian position.
Gold looks good in here, as buying it at or below its production cost price does not happen often.
Barrick Gold Corp.(NYSE:ABX), the largest Gold miner in the world, reported that its Y 2015 full year Gold production all-in costs guidance stands at $860-895 oz, while its cash cost per ounce is at $600-640 oz.
Keep in mind what American economist Hans F. Sennholz said: “For more than two thousand years Gold’s natural qualities made it man’s universal medium of exchange. In contrast to political money, Gold is honest money that survived the ages and will live on long after the political fiats of today have gone the way of all paper.”
Stay tuned…
HeffX-LTN
Paul Ebeling
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