Can you explain your position on the death cross since the 50 day MA for gold crossed the 200 day on April 17th? Thank you.
Yes, we do have something to say about the death cross in gold. Something quite to-the-point.
It doesn't work.
To be precise, in our opinion, it doesn't work as signaling a good moment to sell gold or silver. Actually, in most cases it was a very reliable buy (!) signal.
Here are the moments where the death cross was seen in gold during this bull market:
- End of Q2 2004 - right after a major bottom and before a big rally (lower prices were never seen after that bottom),
- Mid-2005 - right before a major bottom and before a huge rally (lower prices were never seen after that bottom),
- Beginning of Q4 2006 - right after a major bottom (lower prices were never seen after that bottom),
- Q3 2008 - in the middle of the 2008 plunge.
Which one of the above 4 is the odd one? The last one marked neither a good buying point nor a good exit point - it was right in the middle of the extraordinary decline. In all other cases the death cross was a bullish development.
Summing up, 3 out of 4 cases where the death cross was seen were great moments to buy and the 4th one was neither a good nor bad moment to buy. Therefore, the implications of a death cross are actually bullish.
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