Don’t Forget About Gold

After struggling to get through $1,000 a few times in the past, I think gold is setting up to finally break through.  Below is a picture of the Gold ETF (GLD) going back to 2007 looking at it from a weekly perspective (each bar is a week as opposed to a day). 

You can see below that gold has formed an upside down head and shoulders pattern which is bullish. 


But more importantly, the dollar is now breaking down technically.  On Monday, the dollar index broke through some key technical levels.  That caused a rally in commodities and emerging markets.  But quietly, gold is moving up.  You’re just not hearing a bunch about gold right now because stocks are stealing air time.  I think stocks make a lot of sense right now but I think gold belongs in a portfolio as a trade as well.

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10 Responses to “Don’t Forget About Gold”

  1. 1 tom August 5, 2009 at 10:01 am

    Karl, what’s your take on the baltic dry freight index continuing to tick down since the beginning of Jun.

    • 2 keggerss August 5, 2009 at 10:39 am

      It’s interesting it’s not continuing up but it’s not exactly correlated with the stock market the way GDP rate of change is. But, yes, I continue to watch it.

  2. 3 Clem August 5, 2009 at 11:09 am

    Hello Karl,

    Would you please help interpret why upside vol is slightly greater than downside vol, but adv-decl is very much to the downside, and s&p had a far drop?

    What is causing the differences in the charts? What SHOULD the seemingly conflicting charts mean to me?



    • 4 keggerss August 6, 2009 at 6:18 am

      That means less stock participating yesterday but the ones that were going up were doing so on heavier volume. Yesterday overall was a really good because the indices were down but there were plenty of stocks that went up giving us a positive day overall.

  3. 5 Jay August 5, 2009 at 3:49 pm

    Does it bother you that the neck isn’t holding.

    What I mean is that after the right shoulder we made a lower high.

    You are the expert, just a young chart reader’s perspective.

    • 6 keggerss August 6, 2009 at 6:37 am

      Remember this is a weekly chart and the pattern is developing slowly. I’d argue that the head & shoulders is still developing.

  4. 7 Pierre August 5, 2009 at 4:10 pm

    Karl, would you still use a mix of GLD and GDX for this trade?

  5. 9 Bryan August 5, 2009 at 9:24 pm

    Karl sounds like deja vu all over again. 2006-early 2008 if I remember correctly stock market & commodities and real estate. all going up at the same time. The levels might be different, but I am not sure the result will be any different

    • 10 keggerss August 6, 2009 at 6:15 am

      Very similar. The difference is that the economy was already starting to slow in late 2006. Now it’s accelerating.

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