Gold At Support, In Canadian Dollar Terms

While the chart of gold in US dollars is a bit of a mess, the chart of gold in Canadian dollars looks much different:

 

Gold (Canadian Dollars – Daily)

 

gold_canadian_dollars_001

Gold in Canadian dollar terms bottomed in the summer of 2013 and the uptrend is still very much intact. The decline of the last month is the most extreme sell-off since April 2013 and by multiple measures gold is also the most oversold it has been in 3 1/2 years. The support/resistance between C$1530 and C$1560 is key; if it holds a bounce-back rally up to ~C$1675 will be in the cards, whereas, a breakdown below C$1530 would mean that a deeper correction down to C$1400-C$1450 is likely.

For Canadian based gold miners the Canadian dollar price of gold is important because the vast majority of capex and operating expenses are paid in Canadian currency. Smaller gold producers in particular are less likely to hedge currency risk, thus making the Canadian dollar price of gold much more relevant to their business than the US dollar gold price which virtually all traders and investors are so intently focused.

As an important ‘tell’ as to where we are at in a gold bottoming process I will be watching to see if the C$ gold price breaks above C$1560 or down below C$1530 over the coming days.

 

DISCLAIMER: The work included in this article is based on current events, technical charts, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The views expressed in this publication and on the EnergyandGold website do not necessarily reflect the views of Energy and Gold Publishing LTD, publisher of EnergyandGold.com. This publication is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions. Junior resource companies can easily lose 100% of their value so read company profiles on www.SEDAR.com for important risk disclosures. It’s your money and your responsibility.