For the hyperinflation crowd, yesterday’s weak action in gold must have been a surprise.

That action may signal a change in character.  The GLD chart shows the long supposed bull flag that’s been going on now for nearly five-months. 

If the dollar’s in free-fall destruction, then you would expect precious metals to be on a tear.

Not happening.

Going way back to a real bull market like the launch of the S&P in 1995; we can see strong bull markets are unexpected, violent, and do not allow anyone to get aboard comfortably.

That market lift-off lasted a full eighteen months before a meaningful pull-back.

Gold on the other hand appears punch-drunk.

The chart shows two trading channels.  The one we know and the one that may be happening now.

In today’s action, gold could attempt to close the gap. 

How price action behaves as it (or if it) moves upward will give clues to whether or not it’s now counter-trend to test (before reversing), or impulsive, gathering steam for a breakout higher.

The dollar is at trading range lows.  Bonds appear to be completing their test of the Wyckoff spring set-up discussed here.

There are still massive short positions on both.  Probabilities favor counter-trend action in gold with the real downward push yet to come.

Stay Tuned.

Charts by StockCharts

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