On the gold market, an old axiom has proven to be quite wise through 2016: never short a dull market. While gold hasn’t been dull—the Fed and Brexit have lifted it from doldrums rather nicely—it’s not been the roller coaster ride that was 2011. Let’s take a look at how gold’s “dull” market might actually be a “bull” market. 1

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Definition of Dull Market

An uninteresting movie is dull, but does that mean an uninteresting market is dull? Not exactly: in the trading lingo, a dull market refers to one that falls into a trading range of support and resistance, or one that occurs during a pause in a bull market. 2 With the June gold rush leading into a tranquil gold summer, there’s plenty to suggest that we’re in the eye of a bull market storm, as gold as made no net gain in the past 90 days. Market analysts usually agree that a pause in the midst isn’t bad news. In fact, it’s not even a reason to sell off, since the dull market often works in favor of investors by gathering steam for a new buying wave.

Loose Trading Range

Gold’s range has been particularly loose within the past six months. Gold has trended in about an $80 window, without breaking through to $1,400 per ounce, but without lagging down below $1,300 per ounce. Buyers are waiting for gold to hit a sour note before they buy in, since a dip in a bull market is the surest sign of good value in all of the investment world; note the number of new buyers who snapped up gold when it fell to just $1,305 per ounce at the end of August, propelling the precious metal back up to the 90-day average within the span of a single week. Each time that gold falls, new buyers emerge to capitalize on the trend.

Long-Term Gains

The reluctance of investors to short gold is fantastic news for those who buy physical gold or invest in the metal indirectly. Most analysts agree that gold has a strong future through the rest of the year and into 2017. December gold trades are currently well above their 100- and 200-day moving averages; in fact, the 100-day crossed over the 200-day average back in March for the first time in half a decade. The higher daily highs and lows suggest a range-based growth pattern of gold that will hold to the $80 range while climbing steadily upwards. Some prefer to buy in and sell fast: the 14-day relative strength index of gold has gone above the 50% line, suggesting that for some the gold game isn’t a long game. 3 Yet the decision to hold onto gold for months or even years rather than weeks appears to be a strong strategy at the moment.

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