Chart Master: Gold continues record run

Key Concepts:

• Gold price analysis (nominal vs. inflation-adjusted)
• Technical analysis (chart patterns, moving averages)
• Historical comparisons (1980 peak)
• Overbought conditions (deviation from moving average)
• Potential for short-term correction

Gold Price Analysis and Historical Context

Carter Braxton Worth of Worth Charting discusses the recent surge in gold prices, emphasizing the importance of analyzing gold in both nominal and inflation-adjusted terms. He notes that gold in nominal terms is almost four times what it was in 1980.

Inflation-Adjusted Peak and Reversal

Worth highlights a critical milestone: gold, adjusted for inflation, reached its January 1980 peak. He states, "We got literally to the penny. It was January of 1980. Adjusted for inflation 45 years later, gold has recouped all its losses in real terms. And it hit its." He emphasizes the precision of this level, noting that gold reversed at this point, closing near the low of the day.

Technical Analysis: 150-Day Moving Average

Worth presents a chart showing gold's relationship to its 150-day moving average. He points out that gold is currently 25% above this moving average. He states, "Look at this chart with its 150 day moving average. But we are now 25% above the 150. That's only happened four other times in the past 25 years."

Historical Precedents and Potential Correction

Worth argues that this level of deviation from the 150-day moving average is historically significant. He notes that in the past 25 years, there have only been four other instances where gold was this far above its 150-day moving average. Each time, gold experienced a sell-off of "essentially 10% or more."

Implications and Conclusion

Worth concludes that regardless of one's long-term outlook on gold, the current technical setup suggests a potential short-term correction. He states, "So whether you love gold for a double from here and you have long term views of the banking system and bitcoin and fiat currency, or whether you're inflation or deflation, person or global, it doesn't matter." The overbought condition, as indicated by the deviation from the 150-day moving average, warrants caution.