Why Is Gold Behaving This Way?

The chart below (source: Stockcharts.com) may be very worrying to some  and it may be a source of great relief to others. It shows a potential Head and Shoulders reversal pattern, with a neckline at 90 and a peak of 107.5. If the neckline is penetrated significantly on the downside, theory says that the target destination will be 90 – 17.5 = 72.5, which will imply a fall of 22% from current levels.

Of some significance, the relative strength chart below (also courtesy Stockcharts.com) shows that gold shares have been underperforming the gold price since the emergence of the Global Financial Crisis.
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