Gold And Silver Long Term Trendlines Going Into 2015

As requested by one of our readers, we provide in this article an update of the long term gold and silver charts. The charts show how the price has broken out of the major uptrending channel which marked the start of the secular bull market in 2001.

Earlier this year, we wrote “Gold Almost Back In Long Term Trendline” in which we discussed the same chart but on a shorter time interval. Also, the charts in this article are in log format.

The first chart below shows the gold trendline. In 2011, there was a break above the trendline for a couple of months, as indicated with the green circle. Around April / May of this year, gold broke below the trendline, and it is still trading outside the trending channel. A key takeaway from the chart is that the 2011 peak was extended. Although hard to tell based on this chart alone, it could be that the ongoing correction is a similar “extended” reaction within the trending channel. There is always a possibility for the secular bull market to be over (nobody knows at this point), but the fundamental situation does not call for an end of the bull market (see also this fundemantal analysis Gold Outlook For 2015).

gold_trendline_2000_2014

 

When it comes to silver, the picture looks rather similar to the one in gold. One difference, however, is that the silver peak of 2011 was much “sharper” than the one in gold. Similarly, the ongoing correction currently seems to be “sharper” than the one in gold. Also, silver broke outside the trending channel a bit later than gold, i.e. around July of this year. That was not coincidentally the month when the U.S. Dollar started a huge rally.

silver_trendline_2000_2014

 

 

These charts could suggest that the ongoing correction could be “balancing off” the extended rise of 2011. However, there is not too much time left for the price of the metals to reverse its course. If the precious metals do not reverse their trend somewhere in 2015, then the long term trendline has been invalidated. Time will tell.

Chart courtesy: Goldchartsrus

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