Image courtesy of Google images
Dec 15, 2016
Market watchers who have been following the gold price since early 2000 must by now be quite amazed as well as thoroughly entertained by the run this most iconic of precious metals has displayed. Starting from $340 (U.S) in 2003 price rose all the way to hit just over $1,900 in August 2011. From that lofty height the price has drifted back to the current price of $1,120 which is almost exactly 50% of the entire 13 year run-up.
What to make of this? In fact last January 2015 prices fell to the $1,030 level, then bounced up for most of 2016 to what seems like an eventual close of around 50% which is a significant mathematical level if one follows Fibonacci levels which appears in nature time and time again to build efficient structures- in plants for example to maximize the amount of sunlight leaves can obtain, they are arranged in spirals which correspond to Fibonacci ratio. Plant branches are also seen to follow these ratios. along with various animals and even parts of the human body. Fibonacci ratios and the so called Golden Ratio can be seen so often in nature it seems impossible they would be ignored or not applicable when studying markets, which are basically a reflection of human activity and decision making, or at least so the theory goes.
So, to make a long story short, is Fibonacci in da house?? Are we at the stopping level of this recent slide in the price of gold and is it time to mortgage the house to buy your favourite mining company sector, ETF or even physical gold itself depending on your risk appetite?
So we are making note that a 50% drop from multi-year highs is a powerful retracement level and if one follow probabilities it can be a significant level to watch out for. Stay tuned for more fun in the markets!!