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Tuesday, January 26, 2016

GLD and GDX 1/26

I have not written about gold in a very long time.  Things may finally be getting interesting.

GLD got down to the lowest support line I had drawn on the chart years ago.  This would be a very good place to bottom.  I have seen very little mention of gold lately.  It seems like the bear market has worn most traders out.  This seems like a reasonable sentiment condition to make a long lasting bottom.

This looks like a classic accumulation type basing structure.  The break down a few days ago took out all the stops from weak longs.  The recovery back into the base sets the stage for a rally.  Its too soon to tell if this is the final bottom, but this is a very pretty looking bottom pattern.  I would expect some more chopping around.  Making a bottom does not mean going right into a strong uptrend.  If one wanted to invest in gold stocks for a long term position the risk reward here is very good.  One could start scaling in with a stop below the recent low.  If I am right about this being a bottoming pattern GDX will not see that low any time soon. 

I have no idea if gold will resume its bull market and head back to the 2011 high or not.  It seems due for a bull market even if it ends up making a lower high.  That could easily cause GDX to double from here. 


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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.