Precious Metals Bull Phase 1: Final Impulse Dead Ahead

Everything is now aligned for the final upward impulse to complete Phase I of the great bull market in the precious metal stocks.

All the technical work is now done, the backing and filling complete. The final fuel stop has been taken to fill up on short sellers who will provide the fuel for the final surge powered by short covering. The psychology is properly set with several prominent newsletter writers having kept their subscriber base out and on the sidelines of the market. So let’s take a look at the weekly and daily gold price and see how it has been methodically taking all the healthy steps required to set-up for this rally’s completion.

Here we see my daily Matterhorn chart where the methodical process of gold’s march higher is revealed. All the classic elements are here. The two cup and handles are quite evident. The $1309 matterhorn peak and resistance served to repel the advance two times. Note how the second attempt in mid June was a mini False Break Out with a quick intra day penetration, but it could not hold. Finally when we got the break out it was indeed on MASSIVE volume, just like it should be…classic.

I use the word 'methodical' to describe this process as gold then took the next six weeks to construct a double backtest to the $1309 breakout level. In character, it did this forming a clean bull flag correction from the beginning of July. This week we broke above that bull flag, then appropriately backtested the flag, finishing the week with a strong advance.

Folks, it really doesn’t get cleaner and more methodical than this. The technicals of this chart more than anything argue that this is a bona fide bull market with explosive internal power. Also note the increasing volume in the daily gold chart. Take a step back and view it from a distance, this is the growth of volume in a bull market.

The next chart is the weekly gold chart where we can see a different weekly bull flag which may be a halfway pattern projecting a measured move to the mid-1500’s. It is my hypothesis that this is the level the gold price is seeking as it treks back to “Known Values” which fulfills the role of Phase I in a bull market. Later on Phase II will unfold where the general public and the financial institutions will come to recognize it as a bull market and will want in themselves. Until then it's our private little party.

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Disclosure: None.

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