On woods, and trees – and gold …

But this chart is, of course, the daily chart of gold. At the moment, the old adage of, “not seeing the wood for the trees,” comes to mind when dealing with the price of gold. Even quite seasoned investors are becoming distracted by the daily rollercoaster ride of Bitcoin. We have always felt that gold should be viewed as a long-term investment.

Short term, gold has certainly taken a hit. The reasons for this are many and varied. Bitcoin, is, without doubt, making inroads into investment territory which was previously regarded as precious metals patch. The dollar has been hit badly, and the Fed has created uncertainty about their interest rate policy.

But, gold has one inviolable quality, which bitcoin will never be able to match. it actually exists in a tangible form and to a vast majority of investors it is this quality alone, that will keep them invested in precious metal. It is this that will secure gold’s long-term price.

As we have said, in previous weeks, it is obvious that the new attraction of massive percentage increases has tempted people who would not normally invest in anything, to try their hand at cryptocurrencies.

Whatever the reasons for the slide in gold, we firmly believe that this is not a long-term trend and this is born out by the monthly chart. If you read our previous article, we mentioned the gold price was likely to remain between the 25-day EMA, at 10), and the 100-day SMA, at 9) – and it seems that this is exactly what is happening.

The daily chart is showing the price climbing steadily, at 4). This confirms the change of trend which can be seen, at 5), in the 14-day ADX, (grey line) which predicts a change of trend. At 7), it can be seen how strongly the positive 14-day ADI has turned upwards. At the same time, the negative 14-day ADI, at 6), has turned sharply down.

As yet, there is no positive momentum showing on the Sigma chart, at 8), although it looks likely that it has reached the bottom of its recent trough. We will be looking for a change of color, to maroon, over the next couple of days, to confirm the other indications and signals.

If we then turned to the monthly chart – the narrow range between 9) and 10) becomes obvious. The fact that the daily chart has now turned positive indicates that the last red bar will probably not close below the 21-day EMA (blue line). Even if it does, there is still the backup of the 55-day SMA (green line) as support.

On the downside, all of the indicators, at 11) and 12), are signaling a negative direction. This may well be a lag, and the daily rise, might not yet be evident. However, a look at the sigma momentum, at 13) clearly shows that since the beginning of 2015, sentiment for gold has been moving, albeit gently, in a positive direction.

We see no reason at all that gold will not continue this downward momentum. Unless war breaks out with North Korea, or some other major disaster befalls the world, we cannot really see the gold price emulating bitcoin anytime soon. But, that is not the point of gold. Gold is a store of value – and there is a firm place for it in every portfolio of investments. We prefer to look at the woods – and not the trees.

Noble Gold specializes in IRAs and 401(k) rollovers through precious metals and cryptocurrencies investments.