Gold’s Point of Control

The announcement by Germany’s central bank last night wasn’t as dramatic as I expected. It looks like they will leave the bulk of their gold in New York, bringing home all of their gold from Paris and something in between from the Bank of England. And the final date for the return of their gold is 2020.

For the life of me I can’t understand why it will take seven years to get their gold. Put it in a truck, load it on a ship and send it across. Sounds like a couple of months work at the most.

They must have chosen the year 2020 to placate the markets. The long period of time sends a signal that the desire for their gold was not one of urgency. I bet the Germans get their gold long before 2020 comes around.

The blog states that the:

‘Legendary gold trader Jim Sinclair has sent an email alert to subscribers stating that the Bundesbank’s announcement that they will repatriate 300 tons of gold from the NY Fed and 374 tons from the Bank of Paris is in direct response to outgoing Treasury Secretary Timothy Geithner’s take-down of gold at $1800 in October via the ESF (Exchange Stabilisation Fund).

‘Sinclair states that a Central Bank would not insult another major central bank unless it is an act of financial war, and that a full blown financial gold war is coming as soon as 2015-2017.’

Well I don’t know about that, but I do know that the gold price is building up some energy to rally strongly to the upside above US$1700.

Gold Price Daily Chart

Gold price daily chart
Click here to enlarge


The current set up in the gold price is the most interesting that I’ve seen for many months. I don’t have any gold stocks in my portfolios at the moment but I think the time is fast approaching to pick up a few beaten down gold stocks.

There is a confluence of indicators pointing to a strong resumption of the uptrend in gold above US$1700.

My long term trending indicator is the 35-day/200-day and that is showing that gold is still in long term uptrend although the trend is weak at the moment. A close in the gold price back above the 35 day moving average while in long term uptrend will be a long term trending buy signal now that the price has retested the 200 day moving average.

Also there is an ABC set up which is pointing at a buy signal above US$1700 when the price overlaps above ‘A’ in the chart.

The Point of Control of the past year and a half’s trading is also at about US$1700. A close back above the point of control is another sign that the gold market is strengthening.

So from here there is a nice chance of a chain reaction above US$1700 in the short term. The announcement from the Germans could start to refocus investor attention on the primacy of gold in a world drowning in fiat money.


Murray Dawes
Editor, Slipstream Trader

Markets and Money offers an independent and critical perspective on the Australian and global investment markets. Slightly offbeat and far from institutional, Markets and Money delivers you straight-forward, humorous, and useful investment insights from a world wide network of analysts, contrarians, and successful investors.

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