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Recently Doug Short looked at a number of bubbles and came to the conclusion that gold does not fit the profile of most bubbles. However, that does not mean that gold cannot experience moves that might be called microbubbles. After a sharp run-up August, gold has returned to the trend line established between early July and early August. This is shown in the following graph from the 5 Min. Forecast.


Other trend lines can be drawn. For example, even after the recent dramatic pullback, gold remains above the strong uptrend defined by Erik McCurdy in April.

In the following graph from Yahoo we see six-month and one-year trend lines:

Five-year and ten-year trend lines are drawn on a graph provided by Advisor Perspectives - dshort.com.

So before someone convinces you that the gold bull market is over, you should make sure what reference they refer to. The trend lines with different time frames define different values for the market. The current trend line levels for gold are shown in the following table.

The following chart from thechartoftheday.com suggests that the long-term trading channel for gold should currently be $1,100 and $1,600. Recent prices have risen above that trading range, but there is no reason why prices could not return to that range and continue the uptrend.


If gold is in a long-term bubble, it cannot be confirmed until the price drops below the long-term trend line, currently at $850 and upward-sloping. Gold could experience a short-term bubble (1, 3 or even 5 years) and still have a long term bull market. If the ten year trend line remains intact for another ten years, the price of gold will have a support level near $3,000 in 2021. As Steven Hansen has said when comparing gold to silver and mining stocks: "Gold, however, is not a hot investment - just a tortoise."

What could support such a trend? I posted another graphic from the 5 Min. Forecast a month ago that shows one driving force: rising incomes in Asia:

Source: No Asset - Not Even Gold - Goes Straight Up