Gold Ready to Make New Highs

Gold is acting as if it is ready to make its next move taking out the triple top and beyond.   After spending 28 days below its 50-day moving average the gold ETF (GLD) has recaptured it and is generating a buy signal.  We thought we’d see a test of the 200-day moving average and wrong.   Gold is a very technical trade and usually follows the rule of technical analysis fairly well.

Inflation is clearly picking up and the hard (a misnomer?) currency central banks are timid and losing cred.  This includes the People’s Bank of China, in our opinion.   We recently had some bookshelves made for our office and were so happy with our guy’s work wanted to order a few more.  He said it would cost us an extra 50 percent as the price of the lumber spiked on him in the past few weeks.   It’s here folks and we think part of the incredible strength in equities is the result that stocks are an inflation hedge.

Nevertheless,  gold has put in its time consolidating, shaken out the weak hands and gotten enough players short to potentially make a big move here.   Geopolitical risk is increasing, inflation is rising, and short term rates are at zero percent.   We took some of the gold ETF with a stop about 1 percent below the 50-day.    The risk is the Fed starts talking tough.  Yeah, right!  (click here if chart is not observable)

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6 Responses to Gold Ready to Make New Highs

  1. Pingback: Gold Ready to Make New Highs «

  2. John_L says:

    I agree with pretty much every point. Probably means we’re both wrong

  3. Steve says:

    Spot on my friend.

    Spot on.

    Just as an aside… tis time to be in the GLD 150 June 2011 Calls. They are dramatically
    undervalued right now.

    Get ’em while they’re hot.


  4. sextisfaction says:

    while I’m bullish on gold, but not sure will it make new highs in 2011, my feeling is it may under-perform relatively to silver

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