Harmon: Gold On Edge Of 'Major Breakdown'

Yes, I know that Gold SPDR Gold Trust (ETF) GLD prices have been falling for 5 years so for many of you this may not come as a news, and others of you will tell me I am late to this view. To be fair, I have talked about Gold falling for 4 of those last 5 years. But unlike Peter Schiff who recently reiterated that we will see $5000 Gold prices, I see signs in the price action showing the possibility of a major breakdown. An acceleration of the downtrend.

The long term chart above shows the precipitous fall in Gold from 2012 into 2013, followed by a long steady channel lower. It is how the price of Gold may end this year in that channel that raises this possibility. Without a rally above 1075, Gold will close the year at 6 year lows and on the bottom of that channel.

It has bounced before at the bottom of the channel, and it may do so again. But the candlestick print for the month of December will be the first to show some separation from the 50% retracement level of the 10 year move higher. This separation is what is troubling. Continuation would look for a move to the 61.8% Fibonacci level retracement under $900. Momentum indicators support this kind of move.

Looking at just the last year shows that channel zoomed in above. The short term technicals are what are troublesome. The movement since the beginning of November has failed to push the price of Gold above the middle of the channel. The momentum indicators show a turn back lower at much lower levels than the last several tops. A much weaker bounce. In fact, no bounce. With this price action it would not surprise me to see a price of Gold under $1000 in the first quarter of 2016.

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