Gold At $1360: Will This Time Be Different?

www.silverdoctors.com

Over the last several years, gold has had a rough time breaking-out above $1360. Will it be different this time? The mainstream is starting to ask…

The mainstream is starting to take notice of gold’s recent price action, especially as it gets towards $1360.

Here’s coverage from MoneyWeek:

So I will start by saying this: if gold can get through $1,360 – and it looks like we are closing in on that level – and up above $1,400, that will be a major psychological barrier broken. The action of the last five years would suggest that it probably won’t, at least not at first, but who knows – maybe this time it’s different.

Gold has traced out a huge, multi-year inverted head-and-shoulders pattern, if you attach any importance to that kind of thing.

*****

For me though, the sea change is the reports of extraordinarily high gold demand from central banks. I don’t think central banks are what you would call “smart money”, but that they are buying is telling: it is a recognition that gold has a role as money.

The extremely powerful narrative that gold, not the US dollar, is the international reserve currency could be starting starting to emerge again. The World Gold Council notes that central banks added 651.5 tonnes to official gold reserves last year, the highest yearly total of central bank purchases since 1971, when the US came off the gold standard. And the second-highest yearly total on record.

So a secular change in Fed-speak, a shortage of physical gold (in the UK at least), extraordinary central bank buying. Could it be that gold is embarking on a proper bull market? It’s possible. This run certainly feels different to those of the last four or five years.

Here’s a look at the pesky resistance on a 3-day chart:

And we’re setting up for a test of that nasty resistance very soon.

Will it be different this time?

Regardless, if the stock market surges to new all-time highs, and by doing so, the stock market takes the spotlight off of gold, than it is likely it won’t be different, at least not for a while longer.

On the other hand, if it is not that stock market that is getting the attention, but gold battling for multi-year highs, then maybe.

One thing seems certain: Either way, we won’t have to wait long to find out.