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Thursday, September 2, 2010

My take on Gold

The GLD looks to be forming a "leading diagonal." This pattern is bearish as it usually forms at the final up leg of a chart. If this pattern plays out expect a move down to $101-$105 GLD.

My confidence in the pattern will build if we find resistance @ $123-$123.50 and pull back into $120.
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4 comments:

  1. yourfinancialbloggerSeptember 2, 2010 at 9:05 AM

    correction: ENDING DIAGONAL

    ReplyDelete
  2. DiogenesSeptember 2, 2010 at 12:11 PM

    Im not sure about your analysis. Maybe thats my HOPE but as soon as there is going to be a bearish market gold will be offensive. Of course there should be some corrections of the trend but personally im waiting for small bubble and sell my gold on the top. what do you think about it. it should go to 130 - NYSE:GLD
    cheers

    ReplyDelete
  3. yourfinancialbloggerSeptember 2, 2010 at 1:45 PM

    My take on Gold long-term is very bullish. But indicators show a divergence in prices. From the 2009 highs to 2010 highs each move has been getting weaker.

    With that said, I don't think Gold will breakout above its rising wedge. Granted, commodities usually extend in its final leg up like oil did in 2008 when it topped @ $147/barrel. Gold does not look too extended but if it does break above its wedge I expect a final spike in Gold.

    Gold is a defensive play during times of distress, yes, but if we are in a DEFLATIONARY environment the price of Gold should sink with the markets as it did in the past...The Great Depression.

    Furthermore, with interest rates at 0% the only move here is up. And we know how that affects Gold.

    Remember, people want the banks to loan again. But at 0% interest rates, why should banks make risky loans? 0% means the bank doesn't owe a thing, they would rather keep the money locked away in a vault, out of the hands of the public...So to get these banks to loan again rates will have to go up eventually.

    GLD should not fall below $100.
    *cheers*

    ReplyDelete
  4. yourfinancialbloggerSeptember 2, 2010 at 2:09 PM

    "**correction: the prices of PRECIOUS METALS should sink with the markets as it did in the past... The Great Depression"

    *Prices of silver fell during the depression. Gold was not free to trade. It wasn't until 1933 when FDR gave an executive order and made the ownership of Gold ILLEGAL. Since then our currency has been fixed with gold.

    ReplyDelete

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