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Long Term Oscillator Points Towards Gains in Gold

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A long term oscillator, known as the Coppock Curve, points towards gains in gold. Figure 1 is a monthly chart of gold with the Coppock Curve in the lower panel. The Coppock Curve is currently trading below the lower trading band that looks for statistically significant extreme readings over the prior 36 month period. The Coppock Curve has been popularized as a long term oscillator that has worked reasonably well at identifying bull signals in the Dow Jones Industrial Average.

Figure 1. Gold/ monthly

For the past 12 months, gold has been consolidating the nearly 100% gains that took place over the prior 2.5 year period from 2009 to mid-2011. Currently, we find the Coppock Curve in an oversold position and below the lower trading band. Prior instances (since 1998) of the Coppock Curve being in a similar position are noted on the chart. Long term price projections suggest that gold could make it to the $2500 level.

 

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Wed, 09/12/2012 - 04:28 | 2784435 Zero Govt
Zero Govt's picture

"The Coppock Curve has been popularized as a long term oscillator that has worked reasonably well..."

How awesome is "reasonably well" ?!

If we chuck the Coppock Curve into the tool box with all the other don't-quite-work technical indicators like RSI, sentiment, divergence, Elliot Waves, 100-200DMA, Bolinger Bands, Fibbo and some popcorn too we'll really be motoring (looking out the rear view mirror at a dozen different angles)

and if we use all these unreliable tools cobbled together we may one day build a shining new Rolls Royce ...maybe!

Mon, 09/10/2012 - 15:02 | 2779366 Amagnonx
Amagnonx's picture

Oil is the ultimate measure of inflation - as the cost of oil goes up, the price of everything goes up.  All economic goods rely on oil for production, so as oil goes up - less goods are produced, and the price of those goods goes up. The easy oil is mostly gone, now oil is deeper, offshore or generally more expensive to produce.

 

In an inflationary enviroment, where household and sovereign debts are reaching saturation point, and prices are rising - cash and bonds will lose value, and while there may be many places you can store your wealth to protect it - gold and silver have properties that make them more desirable than many alternatives - they will absorb a lot of capital and their price will relfect that.

 

The rise in oil prices will be reflected by an even larger increase in the percieved value of gold and silver.

Mon, 09/10/2012 - 13:20 | 2778931 Bastiat
Bastiat's picture

You must be one of those conspiracy theorisists.

Mon, 09/10/2012 - 12:57 | 2778845 hettygreen
hettygreen's picture

I don't care where the stock market or bond market or gold or any other over-priced, over leveraged 'asset' is headed but I wouldn't be surprised if the directional indicators popularized in the halcyon days of the last bull market (in just about everything) are going to become pretty much useless artifacts in the years ahead.

Mon, 09/10/2012 - 12:24 | 2778727 Jack Sheet
Jack Sheet's picture

She said, "You're not serious!" It was then that I uncoiled my long term oscillator.

Mon, 09/10/2012 - 10:54 | 2778381 OneTinSoldier66
OneTinSoldier66's picture

Got a Fiat Oscillator Chart? Just thought it'd be interesting to see it if you happen to have one, especially for comparison purposes. ;-)

Mon, 09/10/2012 - 10:44 | 2778341 Sutton
Sutton's picture

Chet Coppock-"Put another dime in the juke, the floor is yours."

Mon, 09/10/2012 - 09:36 | 2778115 Roandavid
Roandavid's picture

Really, there is only one possible, appropriate comment to make following a post such as this.

Gold Bitchez!!!!!

There, I said it and I'm glad.  Now move along folks, nothing more to see here.

Mon, 09/10/2012 - 09:34 | 2778107 UncleFurker
UncleFurker's picture

 

Technicals can't work in a system riddled with fraud.

 

 

Mon, 09/10/2012 - 10:58 | 2778404 malikai
malikai's picture

Technicals become weapons of war in a system riddled with fraud.

Mon, 09/10/2012 - 10:00 | 2778183 Comay Mierda
Comay Mierda's picture

says the ignoramus who has never studied technical analysis

Mon, 09/10/2012 - 09:08 | 2778036 Bullionaire
Bullionaire's picture

The long-term oscillator I follow, "Central Planning ALWAYS FAILS," points towards gains in gold.

Mon, 09/10/2012 - 11:47 | 2778601 LawsofPhysics
LawsofPhysics's picture

Yes, physical, not necessarily paper gold.

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