August 14, 2024 - (Gold Market Wire) - As, perhaps, the lone sceptic of the recent Gold rally - now flirting with $2500, and having recently set yet another all-time high (close - not intra-day), it is on us to explain our reasoning. As things stand now, aside from the seasonal variations which we are encountering - i.e. "Late August Silly Season", where COT likes to play its games, there are two major factors.

The first is Gold's rising wedge, which has us concerned:

To most market participants, and the perma-bulls who make up their throng, this looks like a wonderful picture. The higher highs are there....the higher lows... it all looks good. The tenor of falling interest rates is also helping. But we see this rising wedge formation as one which is indicating a coming move lower. Its a classic formation and has us concerned. Sure the 'showdown' could be a few days out - even a couple of weeks, but unless we blast through $2500 with real conviction, we believe that move is further in the future. We aren't getting the trending formation that makes the moves higher convincing.

The second point of concern we have is with Silver. As regular readers here know, we like Silver as a leading indicator. (It also helps to confirm.) And while Silver has had its medium-term laggards hat on for the past few years - it has still worked as solid indicator of forth coming rallies, even if the Gold/Silver ratio keeps rising. In the vein, we present:

That is not a convincing picture. As we pointed out several days ago, the 50-100 day moving average cross looks ominous to us, although it hasn't happened yet.

So, ultimately its just a risk/reward profile. Chase Gold strength? Not for us. Worried about Silver? Yes we are. If we miss the BIG one...? Eh, we can get in later, when the market has settled.

We are staying on the sidelines. The time to buy isn't right for us. We remain bullish for the next few years, but we will NOT chase Gold up here. Bowing to the master is always important. He was, after all, probably the best in the game.