There has been a ton of work done by GATA.org (and others) with regards to exposing the ongoing manipulation and fraud that is ever present in the gold market(s). They have managed to turn fringe conspiracies and rumors about price manipulation and suppression into mainstream issues that can move markets. At the recent CFTC hearings, GATA, with the help of Andrew McGuire, helped bring to light some of the most damning accusations against the LBMA I have ever heard. I think traders have begun to digest this information, and only now are we starting to see what I believe are the effects of these claims on the gold futures market.
Gold 2000-2010
Unfortunately, I do not have a way to generate charts for gold futures in my charting application, so further below I will be using the GLD fractional-reserve ETF as a charting-proxy for where I think the price of gold is headed since GLD does a good job of tracking the relative price of gold.
As evidenced by the recent bullish price action, it appears that gold is poised for a breakout over $1,200.00 With the recent accusations about insider trading, the 100:1 leveraged paper market at the LBMA, the manipulation of the futures contracts by the large bullion banks, the supposed empty bullion vaults at ScotiaMocatta, the concentrated short positions by only a handful of banks, and the fact that central banks around the world are net-buyers of physical gold, I believe we are left with very little room for extreme downward pricing pressure. To be honest with you, my gut instinct tells me that we will never see gold below $900.00 for quite some time.
There are many times when the studies drawn on a chart reveal stunning patterns that would otherwise go unnoticed. It is precisely these times when I like to sit back and ponder the big technical picture.
2010 Gold Analysis
In this case, we see that gold is trading within a very specific Fibonacci pattern that assumes an upper limit trajectory of $1500.00 per ounce of shiny yellow metal. The premise here is simple: I believe we will see a melt up in the price of gold over the next few years due to, among other things, the various fundamental catalysts I mentioned earlier. I believe that the melt-up will occur along this Fibonacci retracement pattern; first testing $1,200 in the near term, and anywhere between $1250-1500 in the intermediate term (2-3 years).
A move from $1,200 to $1,300 is a modest gain of only 8.33% and easily possible.
$1,200 to $1,400 is a nice gain of 17% and is also quite achievable.
$1,200.00 to $1,500.00 is a gain of 25.0% and I don’t think it is unrealistic to see this new high in the next few years
