CONCLUSION: Gold is right at a critical pivot point. Such a point means it is at support and has the opportunity to rally, but if it does NOT fairly promptly (a couple days at most) rally, it will correct back down to the 50 day moving average at a minimum.

9-04-2011: Is Gold Buyable on a Technical Basis???

Before you answer, study this chart in detail. Feel free to add your own conclusions to the comments below.

Charting system provided by Worden Brothers at FreeStockCharts.com):

Is the GLD ETF buyable here? The short answer is no, unless you are very unexposed to gold at this point. Then I suppose one could argue that an investor should buy at every point, and plan on buying more lower AND higher. On a technical basis, the GLD ETF must make it over the last high and continue moving up to trigger the next buy signal.

That number is at 184.82. That was the last high that we need to exceed for the next BUY signal. Why buy the GLD ETF when it is just below there, in a state of "stretch" on the chart, meaning it is far above any reasonable uptrend line you could draw? If you draw a line connecting the 1-27-2011 and the 7-1-2011 lows, it hits the price scale on the right at about 150 or so and we are currently at 183.24! That is stretched.

When chart trends become parabolic, where the rate of increase keeps increasing more and more, they become susceptible to correction. That is where the GLD ETF is at today - in need of a correction. Panic into gold based on the Eurozone financial fears is driving up the price of gold to what are "unnatural levels." By unnatural, I mean levels where the price will correct violently when the panic dissipates, which it often does.

What's the catch? What could just propel gold to $2500 without stopping? Total economic disaster in Europe and the dissolution of the European Union and the Euro would do it. Could it happen? Some argue cogently that it could. Others don't buy it. You'll have to decide for yourself, and feel free to leave your comments below.

CONCLUSION Gold is not at a good technical buying point, but it certainly is NOT a sell. Gold will continue to be an intermediate term hold at least for at least a few years, as long as you can afford to lose up to 20-30% in dollar terms if you buy near here. Corrections of that magnitude are not that uncommon. Look back at 2008 and note the sizeable correction in gold and the crash in silver. So if you cannot afford to hold gold through corrections like that, trade it instead. My newsletter will likely help you with that goal. And please read the article linked below the comments block. It shows exactly how overpriced gold has become, at least for now. Yes, it can become more overpriced just as Yahoo's stock did in the late 1990s when it went to around $108 per share (now at $12.87).

So do NOT invest in the GLD ETF money that you will need to access within the next couple of years. Add to your core gold position as you accrue more and more wealth, some say at least up to 5% of your assets. Some say more, at least under current circumstances.

And perhaps you'll decide to use a stop loss on part of your long term position to avoid giving back too much of your gains if you've had them. That is a matter of choice and of your financial flexibility. Does Jim Cramer who is supposedly worth over $100 million need to sell any of his 20% gold position? Probably not, but even he will likely lighten up a bit once the dust settles from the current financial crisis and he'll be invested more in tech stocks etc. at that point.

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8-23-2011: Is Gold Cheap???
You'll be surprised by this analysis of the price of gold:

Gold Analysis: Is Gold Cheap???

8-02-2011 Here is what the GLD ETF Chart looks like now (charting system provided by Worden Brothers at FreeStockCharts.com):

Gold is creeping up making small breakouts, bit by bit, so the chart is OK. The gold ETF is still an up trend. The rate though is slower, which tells you gold investors are more tentative than before, so now is the time to use a stop. The red lines on the chart show you some of the key support levels. One not shown is the 7-28-2011 intraday low represented by the green line. The widest stop I would consider is to allow for a retest of the breakout at 153.61 above the May 2nd high, but that is a bit too low for my taste.

The US dollar index is gaining some tone after the debt deal, so the US dollar is bound to pressure the price of gold in dollar terms. If the US dollar becomes too strong, too fast, gold will correct, and it will fall below several of those red lines. For now, its a Bull market.

Always adapt my comments to your own investing style, and you will do well.

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Prior post on GLD ETF: Prior Post on GLD (Gold ETF)

7-26-2011: Gold and the GLD ETF have made it over prior resistance and the gold breakout is intact. We may still get the retest of the breakout if the debt ceiling issue is resolved however. It could fail if it does retest the breakout, especially if Europe is calm.

07-20-2011:Gold On Pause

Gold hit $1600 per ounce (GLD ETF hit 156.58) and decided to take a nap. It has pulled back and will likely retest the breakout point of 1575.79. For the GLD ETF that translates into the prior high of 153.61, but 153.45 may be more accurate when you translate between gold prices and GLD and look at what that ratio is. The point is that the GLD could retest around 153.45 and that would be fine. Believe it or not, this is one of the only places to find the all time high for gold. For some reason, London closes etc. are often quoted. THAT is the number to watch.

For the gold rally to continue we can either:

1. Stay above that number while pulling back

OR

2. Pull back a bit under that high and not plummet into a further correction. Then the breakout to new highs will be intact.

OR

3. Make a new high. But on the way to attempting that the GLD ETF could move back up to about 155.67 from here, fail to make a new high and come back down and retest the breakout.

Practical Trading/Investing Advice: There is no reason to rush to buy gold or the GLD ETF now that it is easing back. If you don't own any, that may be a reason to buy it slowly of course, and I have never advocated trading out of long term positions for years.

But for a trading position, the above parameters are the ones to watch. If you see gold retest slightly below the breakout and recover, that would be a perfect buying point. Then you simply have a tight stop in place. Remember that it is your money so do what you feel is right for you. If you are not a "trader," don't trade, but do have some point in your mind where you will get out if any investment turns sour. Right now, the gold breakout is fine.

What if gold goes straight up? Right here, we are at some support (154.79 is support on the 15 minute chart for example). You could buy here with a fairly tight stop. Then watch how it behaves as it moves higher and maintain some profit as best you can. And if gold goes straight down, you'll be needing a mental stop to protect your capital.

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07-15-2011:Gold Breaks Out! Latest Gold (GLD ETF) Comments

07-01-2011: The May GLD lows will provide initial support and then look for around 141ish if those levels do not hold. Gold has slipped because the European situation in regard to Greece has subsided enough to restore investor confidence. The US dollar has slipped along with gold. As I pointed out, the opposite pattern is typical of what I call the "European Panic Scenario," which is gold UP, US dollar UP, and stocks DOWN. We are simply reversing that right now. For the resistance points, see the 7-5-2011 Brief here: Market Timing Brief

06-10-2011: A GLD ETF Timing Article about where the gold is headed: We'll Just Have to Wait

Gold has formed a high and has pulled back from that high. The initial correction was 7.2% based on intraday highs and lows for the GLD. Then a higher low was formed, which provided support for the latest rally.

That GLD ETF rally has now stalled a bit. The gold market has been in consolidation (sideways motion) for about 10 days. GLD is either going to limp down to a retest of support at around 146.5 for the GLD or retest the last high at 153.61.

The way to play a consolidation as a trader is to act according to the direction of the next break.

What is negative for gold at the moment is that:

1. The Federal Reserve is turning off the printing presses with the end of QE2 at the end of June. The monetary situation could become deflationary.

2. China and the rest of the world are RAISING, not lowering rates, so growth is going to slow worldwide. It already has. This is deflationary and works against gold.

3. The housing situation is still bad, so the root cause of the financial crisis in still on the table and is a big drag to our economy. Hence, deflation rather than inflation becomes the risk.

The Federal Reserve, as I Tweeted this am is in "Fed jail." They can either have Fed induced inflation with resulting slow growth or they can do nothing and have deflation with slow growth. They hoped to be able to stimulate the economy and avoid inflation, but it did not work. They clearly had the public up in arms about gas and food prices. There were riots in several locations around the world concerning food prices. The policy FAILED.

Jim Rodgers said yesterday on Larry Kudlow's CNBC show that it is inevitable that the government printing presses be turned back on. I would agree, but in the interim, temporary deflation could be seen until the next lamebrain government intervention is designed and rolled out.

I say lamebrain, because economies are really like patients. If you think a patient needs an antibiotic for an infection, you prescribe a reasonable dose. If the patient does not get well in a day, do you then increase the dose ten-fold? No. You JUST HAVE TO WAIT. The government responds politically and is terrified to admit that "nothing more can be done" for the patient, in this case, the economy. Some healing just takes time and throwing more medicine at it can cause side effects, like inflation.

CONCLUSION: The GLD ETF is likely to pull back as temporary deflation occurs due to Fed inaction and the US dollar rallies. The GDX is already signalling more weakness in the metal. But it won't likely last for long and is being somewhat mitigated by Central Bank buying of gold and the sense that investors are getting that "GOLD IS REAL MONEY." Do you sell your dollars and buy Euros every time the dollar goes down? So do you sell your gold? Your trading position, YES. Your core position, NO, in my opinion.

Always remember that it's your money and your decision as to how to invest it.

05-08-2011:

Gold Is Breaking Down Please get the latest update on how the US dollar is bringing down gold here: The Buck Stopped THERE and is Going Up For Now

4-27-2011: A Gold ETF Timing Article about where the GLD ETF is headed.

GLD has broken out again. The latest new high was achieved on 4-15-2011 and trend has been up since then. Even yesterday's blip down did not start a down trend. Not yet.

The key as mentioned today in my mid-week update (see "Read My Feed" and click on the mid-week update link), is the US dollar. Gold has a hard time making progress when the US dollar is strong. The only time they move together is when there is general market/world panic and during the Libyan crisis, that correlation FAILED to work for the first time in a long, long time, raising concern that the US dollar has already begun to lose it's standing as the world's top reserve currency.

All that aside, the Fed has the power to turn off QE2 early or stop buying paper whenever it wants. The Fed has been printing money to buy massive amounts of our own government's debt and slapping that on its balance sheet. It is a big charade that must end at some point. It is only because the economy is extremely weak that they have been able to get away with this deception for this long.

Here is an actionable number: If the Fed drives the US dollar back up today with its comments and the dollar index makes it back up through 74.23, the gold rally and all the other rallies referred to in my mid-week update will FAIL and correct a bit. A close of the US dollar index above 75.63 would turn a downturn into a much stronger correction of 10-15%. And the GLD ETF would correct strongly as well.

4-12-2011 GLD ETF Update

There are warning signs flashing. Those of you who have read me for a while know that I've emphasized that mining stocks MUST move with the underlying commodities in general. Oh, they can stray for a while, but they need to keep on track overall or the commodity will fall as well.

And what is happening now? SIL (silver stock ETF) is down 3.11% while silver is down only 0.15%. GLD was almost flat, but the GDX was headed down much faster. At 10:12 am ET, that picture is shifting and GLD is down 1.02% with GDX down 1.66%. But the miners are leading the commodities down into a correction. GLD must hold the 139.54 breakout or greater trouble will be in store for the shiny fellow. Even a break of 141.28 is questionable in terms of the immediate ability to sustain a gold ETF / gold rally.

Commodities topped out by failing a breakout yesterday and we are moving back into correction mode. We cannot say how deep this will go at this point, but the US dollar is long due a rally, so watch the buck and you'll know when to further lighten up on your commodity positions.

Here is my latest comment about the US dollar. If you follow gold you MUST follow the dollar in my opinion:How low could the Buck Go?

What else "stinks"? Sentiment. I report on sentiment here generally every Thursday: This Sentiment Level Stinks

Standard Disclaimer: Remember, it's your money and your decision as to how to invest it.

4-05-2011:

Gold is now testing the prior high with the GLD ETF hitting up against 141.28, which is ABOVE the key breakout point of 139.54. This does represent a bit of progress, but sometimes a marginal new high is achieved only to see a breakdown below the previous breakout point. With the US dollar at a significant low (see recent market timing blog), gold should be under some pressure in US dollar terms. Dennis Gartmann's idea of buying gold in yen is fine, but not practical for most investors who invest in dollars.

Watch the GLD ETF today. The first step would be a close over 140.55, but we've already hit up against 141.28, so wait for a close above there. The fact that GLD is having some trouble staying above that level of 141.28 says that it may not hold into the close.

9-29-2010: An ETF Timing Article about where GLD ETF shares are headed.

So where are we now?  (You can read the prior entry below by the way.)

1. GLD has continued to move up WITHOUT the HUI Gold Stocks index.

• GDX is still below the 56.87 high on 3-17-2008.  Right now at 56.68 (Prices around 2:35 pm ET).

• The corresponding index HUI is at 514.755, also shy of the high of HUI on 3-17-2008 of 519.68.

• That means that the rally in gold has still not be "verified" by the gold stocks, despite the fact that buying the last breakout in GLD at 123.56 would have made you at 128.04 today, 3.626%.

2. This gold rally has been steadily more or less in one direction with only very minor corrections of one to three day periods since the closing low of 113.51 on 7-27-2010.

• It may be time for a pullback, ESPECIALLY if the GDX/HUI do not break out soon above the prior high in 2008. 

3. This trend in gold has been highly supported by the downtrend in the U.S. dollar since the break to the downside of support on 9-22-2010 (below 80.08).

• Be cautious on gold if the dollar finds new strength, especially if it rises above 80.08 and that "recovery" level sticks.

• BUT the dollar could slide all the way down to the low of 74.23 of Nov. 2009.  That is another 5.74% down from here.  That would give gold a boost beyond organic bold buying.