Why Chris Kimble is Getting Bullish on Gold
Gold prices peaked back in 2011 around $1,900 an ounce and have disappointed investors ever since. Currently, the precious metal sits around $1,290 an ounce, or about 32% below its all-time high. The asset class has been a headache to be involved in for the past 8 years; however, chart watcher Chris Kimble of Kimble Charting Solutions thinks the yellow metal could be on the verge of a major, multi-year breakout. In a series of blog posts over the past couple weeks, Kimble has laid out his reasons for being bullish and tells investors the key charts and relationships to watch.
Kimble first weighed in the day after Christmas in a blog post here. In the post, he takes a look at the Gold Bugs Index (HUI) relative to the S&P 500. The ratio of the two asset classes has been in a 7 year downtrend, reflecting that the S&P is stronger than Gold stocks. For the first time in years, however, this ratio is breaking above its downtrend line. This multi-year breakout indicates mining stocks are outperforming the S&P and could continue to do so for some time.
On the last day of 2018, Kimble posted a blog post titled: Gold breaking out against King Dollar! Kimble examines a chart of the Gold/Dollar ratio. He points out that the ratio has been in a rising channel since making a low in December 2015. The ratio is currently testing resistance from the 2017 lows. Kimble explains that what the ratio does at this resistance test will send an important message to the metals sector in the coming months.
A few days later, Kimble published another post examining the weekly chart of Gold futures. He began by explaining that the commodity is currently testing the top of a multi-year falling channel and suggests that the ‘drought’ in Gold may about to end soon. Kimble argues this is one of the most important tests of resistance in years and could be really bullish for Gold if it is able to break out of that falling channel.
In his most recent post, published today, Kimble analyzes a long-term chart of the U.S. Dollar. He acknowledges that the Dollar is in a secular uptrend and had a nice rally in 2018. However, he warns that price has formed a bearish rising wedge and is beginning to break the uptrend line from the 2018 rally. Bringing it back to Gold, Kimble explains that a weak U.S. Dollar would bode well for commodity prices, specifically Gold and Silver.
In his four recent blog posts, Chris Kimble does a thorough job of expressing his thesis for being bullish Gold. He offers several charts of different asset classes and explains why they’re all suggesting to him that Gold prices continue higher from here. One would expect equities to be weak in an environment where Gold is strong. Kimble has used his bullish gold thesis to support his cautious outlook on equities in other posts that you can read here on his blog.