Sorry, gold bugs

 

Gold has rallied in the face of the recent selloff on world markets. That means the gold bear is over and we should back up the truck, right?

Wrong.

Let’s go back to “Technical Analysis 101”,  folks. What do we see on the chart below? Lower highs, lower lows. Price is below the 200 day MA, and below the 50 day MA. Gold is desperately playing with support at $1200, without a clear sustainable move (more than a few days above) off of that price point yet.

gold long

Unless and until gold breaks $1270 and stays there for a bare minimum of 3 weeks (my rule of three, applied to a big-trend, means you need three bars on a weekly chart to prove a breakout) – then we can say the 200 day MA ($1270) has been taken out, along with the last short termed peak of $1250. Traders might want to think about taking a small position at that point, but investors should remain cautious before committing. From there, we want to see about $1350-ish taken out – that’s the last significant high. Investors could consider a position upon such a breakout.

At this point, none of the above conditions have occurred for gold. It’s still well entrenched in a bear market, according to the way I look at charts. Buy gold if you must, but I’d say you are taking your chances. Better off to go to a casino. At least the booze they offer you at a casino will dull some of the pain of the inevitable losses you will experience at their establishment. Gold trading brokers offer no free drinks to losing investors, yet the hangover from the losses must be as intense as that after a big night at the casino. I’m planning to “Arrive Alive”, as the DD campaign suggests, by avoiding gambling on gold – at least until the above conditions are met. Perhaps you should too.

 

Of note:

I’m on BNN’s MarketCall tonight show a week Friday:   Friday December 19, 2014 at 6:00pm.

We have a button on the ValueTrend website homepage that lists upcoming BNN shows and speaking engagements. That’s at https://www.valuetrend.ca/

 

 

 

6 Comments

  • Hey Keith, really like all your postings and commentary. thanks.

    On the topic of arriving alive or not. In New Zealand, they have signs that say:

    “Drink and DrIvE”, where they under line the D.I.E of drive…. good one!

    Reply
    • Cool-thanks for that Bob.
      Lots of good ground has been made in the drinking/driving awareness work. I recall when I was younger that the culture was more forgiving to drink and drive–“one for the road” sort of thing. Scary when you think of it, no matter how sober you may be, some jerk could take you out after his or her night out (just like OPEC just took the oil market out!). I’m always grateful when I come across a ride program!

      Reply
  • Hello,

    I wonder if it would be a good time to get some more of the Canadian bank ETF. ZEB. That yield is just getting better and better.

    Reply
    • Good question–I am long ZEB – its back to its October lows, and I think the sector is oversold – as PM’s ditch oil stocks, they have few Canadian alternatives of high quality–banks, insurance, a select few industrials and consumer stocks. That’s about it – so they will be forced to buy back into this sector. I think the banks will find support at current prices, or close to it.

      Reply
  • Do you use a stop for ZEB Kieth, if so what is it please? Also on BNN could you talk about BIP.UN, you usually do but not always 🙂

    Reply
    • Hi Mark
      I don’t want to see ZEB go below Monday’s low of about $22. I don’t use physical stops. Instead, I watch for a break of support, hold my breath for 3 more days, then pull the trigger if it still remains below my support level. So far, no problem.
      And as for BNN–please phone in or write an email – per the email address given on the blog–specify the question is for me.

      Reply

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