Articles
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Why Gold Looks Terrible (Part II)
Saying yesterday that gold looks terrible led to some thoughtful comments and emails (which are always appreciated).
Given that, it makes sense to provide some clarification:
This was more of a trading view than an investment view.
From an investment perspective, gold may still be “ok” - but the rationale looks shaky.
Bullish arguments based on past conditions are suspect - because conditions are changing (with the charts reflecting that change).
Gold may have witnessed a blow-off acceleration in second half 2011 (see chart below).
So ok - let’s roll up our sleeves on this again…As some of you have pointed out, “it’s all about time frame.” There is a difference between a short-to-medium term time frame - that which applies in trading - and one that lasts for years. Even still, though, we find the investment case questionable. (More on that in a moment.)
Technically speaking, right now gold is in “no man’s land” (though oversold gold miners may be ripe for a tradeable bounce).
The daily chart for gold is in a shortable downtrend, with GLD threatening to submerge below its 200 day EMA (exponential moving average). That is not a condemnation or a guarantee of doom, but a warning sign.
What about the investment case - and the longer term chart?
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