Gold's Next Breakout Nears

Gold edged up 2.06% for the week and more importantly, back into the wedge formation. At the current rate the wedge should be resolved within three weeks to a month. Personally I think it will coincide with the end of February which has tended to be a weak month for gold historically.

While the reasons for gold to rocket from here are strong I think we still have a couple weeks of this range trade ahead of us. I would not be surprised, and actually I expect a spike lower to test the 200 day moving average before a quick reversal higher which will break the wedge formation to the upside. That will be the signal that the trek to $1,500 has begun.

It remains my view that once this small correction passes we will resume the second leg of this move higher and take out $1,500 before we see a meaningful correction. No matter what you are told, this is not a meaningful correction. When gold corrects 20% or more, that is meaningful.

Warren Bevan
www.preciousmetalstockreview.com