Could gold rally to a new record high above its prior 2008 peak?
*Dow Theory Letters, by Richard Russell, December 29, 2008:
"We're close to the end of the year, and I want to talk about
something that is happening, something that few people are aware
of. W.D. Gann is considered by many professionals to have been
one of the greatest commodity traders and thinkers of all times.
Here are Gann's words, courtesy of my old New York friend, Ron Rosen.
‘When a stock or a commodity advances into new territory or to prices
which it has not reached for months or years, it shows that the force
or driving power is working in that direction. It is the same
principle as any other force which has been restrained and breaks
out. Water may be held back by a dam, but if it breaks through
the dam, you would know that it would continue downwards until it
reaches another dam or some obstruction or resistance which would stop
it.’
Let's apply Gann's words to what's recently been happening to
gold. The chart below traces the action of gold from 1980 to the
present. Note that gold rose to a record high back in 1980.
Then for 19 years gold fell back into a bear market. Meanwhile,
pressure to move higher was ‘bottled up’ in gold -- until the year
1999. In that year gold declined to a low of 297. From its
297 low, gold rose in a new primary bull market. In late-December
2007, after 28 years of being restrained, gold advanced above its old
1980 high of 850 and continued to a new record high of 1017. From
there . . . gold declined to ‘test’ its historic breakout area of 850.
This brings us to the present. Gold is now rallying above and away from
the 850 level, and it remains to be seen whether gold can now rally to
a new record high above its prior 2008 peak. If W.D. Gann's
thesis is correct, gold should now be on its way to complete its
primary bull market.”
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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