Tags: Kahn | gold | silver | price

Barron's Kahn: Gold Has Hit a Bottom, Time to Hit the Elevator 'Up' Button

By    |   Wednesday, 21 Jan 2015 03:51 PM

Gold and other precious metals have clearly bottomed, but it may not be too late to get on board with a winning investment, according to Barron's columnist Michael Kahn.

Gold bumped above $1,300 per ounce this week — the first time it had done so since last August — as global economic uncertainties took their toll on investor confidence.

Still, does the increase in precious metals prices amount only to a temporary knee-jerk flight to safety, soon to be reversed, or is it something more basic?

"With no inflation in sight and the U.S. dollar still soaring, there is no real fundamental reason for gold and silver to move higher. Yet, that is exactly what they have been doing. And mining stocks are doing even better," Kahn wrote.

Kahn, a former chief technical analyst for BridgeNews, suggested that relentless bear markets typically make minced meat of optimists, and that the charts are "littered with false breakouts and shamed bulls."

But perhaps it is different this time. He noted gold closed above its 200-day average last week, even as the popular SPDR Gold Trust exchange-traded fund showed escape velocity from a downward trend line.

"Price and volume continue to surge suggesting growing investor interest, and all of this is taking place as the dollar continues to rally itself. Since gold is priced in dollars, there is usually an inverse relationship between the two. Therefore, when both move higher together we can only surmise that there are more than currency factors at work," he argued.

Kahn noted silver prices also appear to be posting an upside break-out, up more than 13 percent in the past three weeks, while platinum is also exhibiting momentum higher.

"The bottom line is that the technicals tell us that metals and miners are back despite the fundamentals and the sentiment surrounding them. Despite this year's big rally, it's not too late to give them a look," Kahn predicted.

The upswing in gold prices could be attributed in part to continuing safe-haven demand for the yellow metal following last week's unexpected decision by the Swiss National Bank to abandon its currency peg, precious metals specialist Kitco News reported. The Swiss move spooked global financial markets.

Other factors for the upward bias, according to Kitco, include the fact that the International Monetary Fund has cut is global growth outlook and that the European Central Bank is expected to embark on a large found of quantitative easing.

"Technically, gold bulls are in charge," Kitco declared. Beyond the $1,300 per ounce mark, the publication said the next bullish objectives on the daily chart are at $1,323 and then $1,347.30.

"However, the market is overextended and overbought, which could usher in a period of consolidation or correction at any time," Kitco concluded, suggesting optimism is best confined to the near-term and medium-term for the moment.

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Gold and other precious metals have clearly bottomed, but it may not be too late to get on board with a winning investment, according to Barron's columnist Michael Kahn.
Kahn, gold, silver, price
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2015-51-21
Wednesday, 21 Jan 2015 03:51 PM
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