Tag Archive | GLD

Gold Goes Parabolic on U.S. Downgrade

Earlier this year at the end of April, silver and it’s exchange traded funds iShares Silver Trust (SLV) began to launch their booster rockets and go “parabolic” trader parlance for a vertical move upwards. The relative strength index (RSI) during that period peaked around 89. Silver hit all time highs of $50, and created a topping tail or reverse hammer, a very bearish indicator and then swan dived 20%.

GLD - Gold ETF

The fundamentals behind gold’s price action are different but in some ways the same.  Gold has been in a strong uptrend for well over a year now. The reasons for this continuously positive trend are varied, a weakening dollar, fear in the markets etc. New language has entered the lexicon of investors, credit default and debt rating downgrade. These two hugely bearish terms have become catalysts for much fear and panic in the equity markets. The results of which are extremely volatile down days that have erased all of the gains of 2011.

When in fear, people run to the exits (as many have) or they run to safe havens, such as gold. Read More…

Gold Speculators Lead Yellow Metal to New Highs, Gold and Silver Miners Surge

by Raghu Gullapalli, SmartStops writer  – originally posted at Minyanville

This past weekend I was watching Wall Street 2 on HBO. During the course of one of his monologues Gordon Gekko, played by Michael Douglas said, “Bulls make money, Bears make money and Pigs get slaughtered.”

 Did Gekko spell pigs P-I-I-G-S?

 Over the past several months the world markets have closely watched the soap opera regarding European debt play out. Perhaps we have mistakenly fixated on the Greek and Portuguese characters when we should have focused on the 800-pound gorilla, Italy.

 One group of people who did have their eyes on developments in Italy were Safe Haven investors, i.e., gold speculators. Physical gold and its exchange-traded funds had a strong surge, pushing gold above an important resistance level at $1,550

 This group of investors led gold to new Euro/gold highs (something I mentioned previously in Silver Is A Value Buy). This was all before Tuesday’s news of the downgrade of Ireland and the possibility of another round of quantitative easing by the Fed. Thats when the whole world started piling in.

 Gold surged again, seeking out the all time highs of $1,577.40 and falling just  $10 short.

Gold chart - GLD

 SPDR Gold Shares (GLD) saw a similar surge, which may well continue in the days to come, as the market begins to price in the Irish default and a possible QE3. The ETF is forming a short-term bull flag and holding well above the 210 day moving average. But with rapid price spikes come rapid declines, SmartStops has the short-term and long-term stops for GLD at $147.52 and $142.55. It is very likely GLD will take out the all time highs of $153.61

Gold chart - GLD

 

Gold chart from Smartstops - GLD

A surprise development from Tuesday’s news was the revival of the gold and silver miners. For several weeks, during the commodity sell off which was sparked by increased margin requirements for precious metals, the miners were in decline and then range bound. Silver Wheaton (SLW) was trading below its 210 day moving average a fairly bearish indicator, as was the Market Vectors Gold Miners ETF (GDX). But on Tuesday that pattern may have changed. If SLW continues to rise it may keep going till the next resistance point at $42. SmartStops has the short-term and long-terms stops for SLW at $33.16 and $29.94.

Silver chart - SLV

Silver Chart from SmartStops - SLV

I’m less confident about GDX as it still below the 210 moving average but a few component stocks of the ETF, Goldcorp (GG) and Barrick Gold (ABX), saw impressive runs on Tuesday.

Gold and Silver Part Ways?

By Raghu Gullapalli, contributing writer

GLD SLV

 Just this morning an absolutely abysmal jobs report was released. This latest news on top of the steady stream of poor economic reports over the past week will no doubt conspire to push the market down. The S&P 500 is down to 1,300 levels and may well seek out the long-term support at 1,250. And on top of all this domestic turbulence, lies the desperate situation in the Eurozone and their dealings with the PIIGS; Portugal, Ireland, Italy, Greece and Spain.

 Economists of all stripes are talking about a double dip recession and under those circumstances you would think there would be a flight to the security of precious metals. While recent increases in margin requirements may reduced the fervor for such investments than in recent months, it will not completely dampen the enthusiasm of many for Exchange Traded Funds (ETF) that can be erstwhile proxies. After all in the midst of all this new terrible news, what is the dollar doing? Tanking!

Much of the speculation has been shaken out of the Silver trade, especially after the dramatic 30% pullback from its all time highs in the first two weeks of May. Despite these more reasonable prices, and its recent range bound state, there has been little or no appetite for Silver.  iShares Silver Trust (SLV) is continuing to trade below its 55 day moving average but comfortably above the 210 day moving average.  Smartstops has the short-term stop at $33.09  and the long-term stop at $32.58

 

In contrast to Silver, Gold has not altered the direction of its movement significantly on the long-term chart. If you look at the SPDR Gold Trust (GLD), five-year chart, the price of the ETF is in a strong upward channel and despite the volatility in early May looks to continue its longer-term trajectory. This supports the opinions of many analysts and Gold bulls that project $1,600 Gold by the end of 2011 and may even lend credibility to the idea of $2,000 gold. Smartstops has the stop price of GLD at $146.84   

The Bubble has Popped, Now What?

by Raghu Gullapani,  SmartStops.net contributing editor

  SLV, GLD, USO, DBC

A rare halt in oil trading Wednesday triggered a sharp sell off in commodities and equities, in markets afraid of an encore of last week’s commodity plunge. The last halt in oil trading occurred in September 2008, a week after the collapse of Lehman Brothers.

Silver lost 9% in the sell off, erasing gains in the previous couple days and is down another 6% in the pre market (as of when this was written). It has yet to find a bottom or to a paraphrase Bob Barker, of the Price is Right, “Down, down it goes, where it stops no one knows.” Now with the increased margin requirements driving a number of speculators out of the market, the precious metal may seek out price levels more in keeping with historical norms. Those prices are calculated by seeing how many ounces of silver are needed to buy an ounce of gold. Over the past ten years the ratio has been roughly 60:1. If silver were to return to a similar ratio, it could go down as far as $25 an ounce. iShares Silver Trust (SLV) the proxy we use in lieu of silver at Smartstops.net has the short-term stop at $31.97 and the long-term stop at $29.37

It that wasn’t enough to make you reconsider being long commodities, Powershares DB Commodity Index Tracking ETF (DBC) has formed a Head and Shoulders. A pattern associated with a change in trend direction. The neckline/support of the pattern, coincides with the Smartstops.net short-term stop at $28.16 and the long-term stop is $27.30

 

 

Is It Too Late to Buy Gold?

By Raghav Gullapani, Contributing Writer

GLD, SLV, GDX, GDXJ, ABX, GG. SLW

This is a question that everyone asks me as soon as they find out I’m a trader.  Of course the question comes in many forms…

Have I missed the move?

Is it too expensive now?

In fact even my Mother asked me that question just this past weekend. And my Mother-in law asks, should we sell?

My answer to all those people is the same. 

Read More…

4 Reasons Gold ETFs Are Expected To Keep Luster

As gold continues to oscillate ahead and below the $1,400 per ounce mark, some suggest that the precious metal could be in a bubble, but there are four reasons the metal is likely to sustain its price levels in the near future.

First, gold continues to be the ultimate safe haven in times of uncertainty.  The US economy is showing signs of recovery, but at a slow and steady pace.  The most recent data that illustrates this is a report by the Labor Department which indicated that US employers added fewer than expected jobs last month and payroll counts increased by 103,000 last week as opposed to the 150,000 expected by analysts.  To put it into perspective, these numbers resulted in Federal Reserve Chairman, Ben Bernanke to state that it would take “four to five more years” for the labor markets to completely heal. Read More…

9 ETFs To Play Currency Debasement

As developing nations continue to implement loose monetary policies, keep interest rates low and boost money supply, a nation’s debt and currency debasement should me of much concern. 

Most recently, a study indicated that the U.S. national debt has ballooned nearly 12 fold over the last 30 years.  Additionally, over this same time span the ratio of debt to GDP has gone from nearly one-third to 85%.  During this time of exploded debt, GDP has only expanded 5.3 times, indicating that debt is growing at twice as fast as the U.S. economy.  Similar trends have been seen in Europe, in particularly Greece, Spain and Portugal.

Some concerns of this exponential growth in debt include hyperinflation, as a result of printing more currency, a decline in the value of a nation’s currency, better known as currency debasement, and increased costs of borrowing, which make it difficult to chip away at deficits. Read More…

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