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Tuesday, March 5, 2013

GLD and GDX 3/5

Interesting things going on in the gold complex.  Check out the weekly GDX chart.

I have labeled what looks like a really big head and shoulders top.  GDX has already broken the neck line of the pattern.  The pattern is so big it is hard to imagine it is a valid pattern.  What if it is?  If so, I would think GDX is headed back to the 2008 lows.  I have mentioned a number of times I don't understand the break down in GDX with the price of gold up where it is.  Is this a sign gold has a lot more down side to go?  I have lots of questions, but no real answers.  It would be normal for GDX to rally back and test the neckline at some point.  If it does that and rolls over to new lows look out below.

Here is the daily GLD chart.

It looks like GLD is trying to make a low here at the lower channel trend line.  It would seem to be due for a bounce.  The 50 SMA crossed above the 200 SMA (golden cross), but the bulls did not come to the party.  The 50 has now crossed back below the 200 (death cross).  Will the bears come to that party and sell the bounce if we get one?

The FED is doing unlimited QE.  The dollar index is going up, gold is going down and the gold miners are seriously breaking down.  Logically, those things should not be happening together.  I am sure these markets are telling us something, but what.  Is another deflation scare coming?  That would actually make sense.  That is how these markets behaved in the 2008 panic.  What else makes sense?  I am having a hard time coming up with another reason.


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