Gold
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Gold
ETF Trading
Monday
February 02, 2009
General Commentary:
We vacated the Gold position this morning. Yesterday was a nice advance, but it could not hold this morning. Gold had a gap down at the opening and there it struggled. We sold at 90.04; taking profits in hand.
A look at the chart(s)
Gold[IAU]
Commodities
http://i21.photobucket.com/albums/b2.../090202IAU.gif
Charts courtesy of www.StockCharts.com
Pricing was above the 50dma.
The Bollinger Bands were showing a modest volatility.
The P-SAR was running bullish.
Volume was low.
The S-STO was registering over-bought.
The MACD was somewhat struggling.
Happy Trading.....:)
I been reading a lot about gold ETFs and how they are taking off. So I've put a number of them on my watch list and am getting ready to trade them in a fantasy account. Here is an article I found that lists the major ones and how they are doing lately.
What’s The Outlook For Gold And Its ETFs?
"Gold investors have found the Midas touch with gold and related exchange traded funds (ETFs) showing a small surge....."
http://www.dailymarkets.com/contribu...-and-its-etfs/
I hope you enjoy it!
Lady
Hi Lady,
Good to see ya, GLD and UGL.
own some gld, cef, & ewc......want to buy more ASAP
feel gold will visit 1500+ sometime soon.
the bunch of "change" oriented specialist now in charge will try 2 print outta this........not to rag on about our white house guest much...just NOT A BIT OF CONFIDENCE AT ALL IN this socialistic obama crowd
know he is my prez now and i respect him for what's he has pulled off. the point is he is a junior senator with very left leaning crooks around him.
GOD HELP US
love faber.....spot on fellow:
http://www.youtube.com/watch?v=58f3UpXu904
http://www.321gold.com/
VR Trader, 2/2/09, by Mark Leibovit, emphasis added.
"GOLD - ACTION alert -
The precious metals had a great day Friday, hitting rally highs, despite the rising dollar. Gold gained 18.80 to 927.10 and hit a rally high of 929..60 in the afternoon, putting us right at resistance of 930. Silver rose 0.32 to 12.67 and hit a high of 12.70. Platinum was up 14 to 987. Copper futures settled up 0.0110 to 1.4685.
Commodities as a whole (the CRB Index) has been creeping higher. The only two groups that have not meaningful participated to date is energy and meats in the commodity complex. It appears, however, commodities as a whole are breaking out of bases and could really take-off here.
Precious metals are benefiting from a huge flight to safety. Back in the autumn stock market crash, Treasuries were the flight to safety instrument. Since then, the US government has "invested" $700 billion in financial firms through the TARP, expanded money supply, and is passing a $819 billion stimulus plan. With all the new supply coming online to fund the growing budget deficit, gold has replaced US Treasuries as the safe investment of choice.
Meanwhile, next upside resistance for gold is 930, 960 and 985 and the record high at 1037. Beyond that, I am looking for 1200. There is a seasonal tendency for a rally into February or early spring, usually followed by a correction. Traders have to be aware of this risk, whether we post new record highs or not. ....
I continue to recommend accumulating the physical metal whenever you can get your hands on it.. Reason? There is not a single central bank or financial institution in the world that can create more gold. Its supply is extremely limited. All the gold ever mined in the history of the world would fit into two Olympic-size swimming pools. In addition, every central bank on the planet is printing fiat money like crazy. Plus, if you think the financial crisis is bad thus far, tighten your seatbelts because it's about to get a heck of a lot worse."
http://www.traders-talk.com/mb2/inde...owtopic=101037
Lady
Here's an article to make you think. Look at what gold bullion did as we came out of the 2003 bear market bottom.
Stock Market is Bottoming, Equities VS Gold Bullion
by Chris Vermeulen, 2/3/2009
"Stock market looks like it has bottomed forming a similar pattern as it did in 2003. What is the better investment during an opportunity like this if this is the bottom: Stocks, Gold Bullion or Mining Stocks?
The charts below will really open your eyes as to how similar today's W looking bottom is to the W shaped bottom in 2003. Of course 6 years later the markets trade and move faster than ever before because of technology allowing traders to track and trade stocks from anywhere with a click of a button. So this years bottom formed much quicker.
Traders, individual investors, hedge funds, financial institutions and even some of the guys on CNBC are starting to buy stocks and etfs (exchange traded funds) at these price levels. I remember the market bottom in 2003 and it was much similar to the type of energy buzzing these past few weeks. Of course there is a lot more drama with Obama as president, Printing US Dollars, Scandals and bad news hitting the market day after day. But what makes all this normal is that it cannot get much worse in the news and everyone is expecting it for months to follow. Traders and investors don't even flinch when bad news comes out anymore and to top it off the SP500 has formed the same pattern it did during the last bear market bottom in 2003. Check out these charts below.
Performance Chart of SP500, Russell 2000, Gold Bullion and Gold Miner Stocks
This chart shows how well different investments performed during the last bull market. The SP500 was the steady gainer posting a 95% gain; Gold Miners Stocks posted a whopping 210% gain but had wild swings which were big enough to shake out even the best traders. Gold bullion and the Russell 2000 performed very well providing a 130% profit with manageable price swings....."
http://safehaven.com/article-12513.htm
Lady
The one problem I have with the bottom theory is that this bear market is only about 15 months old. There's no comparison of the 2001 recession to the current economic environment, yet the bear market lasted three years back then. Of course valuations were a lot higher in 2000, so there's that.Quote:
As you can see from the charts above, it's pretty amazing how similar things look between the two bear markets in the SP500.
Food for thought from 2/4/2009 MarketSci:
"First, a look at the ratio of gold (represented by the ETF GLD) over the gold sector (XAU) from 2005:
Over the last 4+ years, the two have traded in a fairly narrow range versus the other, but in mid-2008 the ratio exploded as investors embraced the “safe” (good for gold) and abandoned all things equity-related (bad for gold stocks).
Note: I’m using the ETF GLD to represent physical gold, and the index ^XAU to represent the sector, because I think those two are the most familiar to readers, but the observations in this post have more or less held for other vehicles such as futures (gold) and the ETF GDX (gold sector).
The Strategy
The ratio of gold vs the gold sector has exhibited a fairly strong contrarian tendency. The following graph shows the results of two strategies, the first (green) going long gold at today’s close if GLD underperformed XAU for the day, and the second (red) going long if GLD outperformed XAU, frictionless from 2005 to present.
The observation hasn’t been foolproof (note late 2005, early 2006, late 2007, and early 2008), but generally speaking, gold has been consistently stronger tomorrow when yesterday it underperformed gold stocks (and vice-versa).
For the number-lovers:
This strategy is exploiting a very small daily advantage (similar for example to adaptive daily follow-through), and therein lays a problem.
Most of the strategies that I talk about on this blog could be traded using leveraged mutual funds (not to be confused with leveraged ETFs). These are the only thing that I trade. Because they incur no transaction fees or slippage, most of the tests I’ve performed on this blog could have been duplicated, for all intents and purposes, as well in the real world.
Not so here. To the best of my knowledge, there are no mutual funds suitable for active trading that track gold (the gold sector yes, but not gold itself). Trading this strategy with ETFs/futures would bring trading frictions that would close an already very fine advantage.
I’m struggling now with a way to improve upon this advantage enough to make it tradable. I share it here in hopes that I’ll generate a spark amongst fellow quant’ish folks who frequent the MarketSci Blog. As always, more to follow.
Happy Trading,
ms"
http://marketsci.wordpress.com/
Lady
GLD or SLV are ETFs I have been thinking about a long position in, especially if the Treasury continues to print money like it's going out of style. Any contrary thoughts?
Yes. Gold seems to be in a bull market again, but may need a breather first.
Gold is the standard and silver is the laggard. Many believe silver never reached its full potential.
Yesterday's Smart Money Tracker blog had the following to say:
"...Once the second phase of the commodity bull starts, and I'm not convinced it has started yet, I wouldn't look for energy and base metals to be the leaders again. Remember the old leaders rarely lead the next bull market. I suspect everyone will want to jump back on the energy bull once commodities do bottom and start the second phase. Granted oil will definitely rally. It may even make new highs again. I suspect it will. But it's not going to be the leader anymore. The global economy has been far too damaged by the bursting of the credit bubble for demand in this sector to recover quickly.
No the second phase will be lead by the commodity sectors that underperformed during the first phase. It will be lead by the commodities that will benefit not from surging economic growth but surging money supplies. That would be precious metals and to some extent agriculture because infrastructure in this area has been neglected for years.
Liquidity will always flow into undervalued sectors.
During the 2001 to 2008 period oil gained over 1400%. I can pretty much guarantee that before the second phase of the commodity bull is over we will see the same thing happen in gold and probably more so as it's much easier for the general public to invest in gold and silver than oil.
You need the public to come into a asset class for a bubble to form. Yes, precious metals will undoubtedly end up in a bubble before this is over. Let's just say I won't be at all surprised to see $3000-$5000 gold before this is finished.
That being said we are now due for a correction in the precious metals markets. Ultimately it will be a buying opportunity whether gold holds above the 1980 highs at $850 or if there is still one more leg down before we get a final low."
http://garyscommonsense.blogspot.com/
I currently have an allocation in SLV and it may have a short term dip coming, but statements like the ones above are why I'm going to hold it for at least the intermediate term. And I'm going to add a gold position as soon as this pullback starts back up.
For what its worth,
Lady
Gary at the Smart Money Tracker is super bullish on precious metals. Here's his latest piece:
"I'll be the first to admit that gold sentiment is getting too bullish. At some point gold is most definitely going to have to correct and wipe out a big chunk of this bullishness.
However an interesting correlation has developed recently. Gold instead of trading inversely to the dollar has developed a tight positive correlation to the dollar. That has very bullish implications for gold.
The reason being that the dollar is now threatening to break out of the consolidation zone of the current T1 pattern. Once this happens we should see a second leg up in the dollar roughly equal to the first leg. That gives us a target of 93ish on the dollar chart.
As long as the positive correlation remains in play that would suggest a huge move higher for gold ... and don't even get me started on silver."
http://garyscommonsense.blogspot.com/
Lady
Ahh, gold. Such a tough one. It always seems to me that gold always trades in crazy fashion because you have to figure most of the guys who continuously pump gold are so nervous about the prospects of the human race in general.
I have what is probably a 'rookie' question. :noworry: An Credit Suisse gold ETN with the symbol GOE is going through the roof today. I'm talking up 50+%! :notrust:
I tried to pull up a chart in stockcharts but can't. My broker software isn't giving me a good enough chart to decide if there is still a reasonable entry point.
Anyone know why I can't find it in stockcharts?
And I've never purchased an ETN before, because if I remember right you don't actually have fee simple interest in anything if the company implodes.
So does anyone have any thoughts they want to share? GOE a good idea? Bad idea?
TIA!
Lady
It looks to be VERY thinly traded; only 60K shares traded as of 2:20 PM ET, although it says the average is over 2 Mill shares / day.
Looks like it had an interesting day - to say the least. :D
http://www.etftalk.com/images/forum/goe.gif
More gold companies, each with a bit different slant on the market.
http://www.dailymarkets.com/stocks/2...t-gold-debate/
The Great Gold Debate
By Michael Vodicka on February 18, 2009
"Gold continues to be a hot topic in the investment community as the precious commodity edges back towards its historical $1000 per ounce mark. As is the case with most conversations about markets, one side is bullish and the other side is bearish. In this instance, each side has a compelling argument.
“Gold Bugs”
The gold bugs are bullish on gold because of concern about inflation and a weak U.S. dollar. Much of this concern relates to the recent spending habits of the Federal Government, which is running record budget deficits in an attempt to stimulate the battered economy. Gold bugs are suggesting this will lead to runaway inflation as the printing presses move into high gear.
The Bears Strike Back
But the bears say this is hog wash, and that the recent deflationary cycle should continue to weigh on asset prices, including gold. Zacks analyst Paul Ramen underscored this notion, saying that “The USD will strengthen due to its safe haven status and rising confidence in President Obama. Inflation is nonexistent.”
Ramen also notes that slowing GDP growth in India, the worlds #1 consumer of gold, could have an impact on demand.
There is no way good way to settle the debate other than to step aside and let the forces of the market take over. For the time being, the bears are on the sidelines, waiting for prices to drop to initiate. But for the gold bugs who are ready to add to their positions, here are some destinations to invest in gold.
Gold Investment Destinations
Randgold Resources Ltd. (GOLD: 49.10 -0.98 -1.96%) posted solid fourth-quarter results on Feb 9 and painted an optimistic earnings projection, pointing to its strong balance sheet and expanding margins as primary drivers.
Yamana Gold, Inc. (AUY: 9.47 +0.09 +0.96%) provides some diversity because it mines copper in addition to gold. Either way, Yamana is bullish on 2009, with CEO Peter Marrone recently saying the company is “very well positioned for 2009,” due to its low cost basis.
Barrick Gold Corp. (ABX: 38.01 +0.72 +1.93%) has broad mining exposure all across the world in five different continents. The company’s low cash costs of $390 to $415 per ounce should help it stay ahead of the profit curve for another year.
SPDR Gold Shares (GLD: 96.43 +0.98 +1.03%) is a gold ETF that is tied to underlying gold prices. This is a great way to get exposure to gold without going through the cash markets and buying bullion.
Conclusion
All market participants have unique investment objectives. But regardless if you are bearish or bullish on any particular segment of the market, it makes sense to stay informed."
Lady
Saw this on the TSP site from H14FU:
"There seems to be some doubt, from what I read, that GLD the gold ETF does not have the physical gold backing that it should. I have read that GTU (Central Gold Trust) is backed by gold bullion. I will be tracking GTU now rather than GLD."
Anyone holding GLD or know if it's true??
I'm not holding GLD. When I clued in on the gold rush it was already too expensive for me. I saw 14U's post too and looked at GTU today, and it's about half the price per share of GLD. I thought that was interesting. I started thinking of selling one of my lagging positions and buying GTU on the next entry point. Still thinking .... :toung:
Lady
If I look at the 30 minute chart, it looks like the last hour of the day it quit riding the top of the bollinger band and pulled back just a bit. Unless there is a lot of buying at the open to shoot the price back up, that $42 level its at now might be as good as any. But please remember that, although I've been playing with the S&P for decades, I only have a few months under my belt at playing with EFTs. I'm a rookie too!
Lady
If you've become a gold bug, you may be interested in this opinion received yesterday from one of my guys:
"...I’m starting to get quite a few emails from subscribers trying to pick the top in gold. I suspect quite a few got thrown from the bull this morning. Remember this is what bull markets do. They go up and they make it as hard as possible to stay on board for the ride.
Sure gold is overbought. Sure sentiment is getting too bullish. I’ve got news for you bull markets get overbought. Then they get even more overbought. Sentiment gets bullish in bull markets then it gets even more bullish. Just wait till we enter the third phase. We are going to see bullish sentiment like we’ve never seen before.
The bottom line is we have a target on the dollar index [estimated to be 94-95 in a previous message. Lady]. Gold is trading with a positive correlation to the dollar. Unless that correlation all of a sudden breaks down we simply don’t have any reason to sell any of our precious metal positions until our target is reached...."
For what it's worth,
Lady
Interesting. It's the reason many of us miss big moves. I have been looking for a pullback in gold myself. I feel the same way about the dollar - due for a pullback, but maybe it will keep going??
I just wonder what will happen to gold if the dollar does indeed pullback? 1200 maybe?
Yesterday's Ord Oracle on where they think GDX (gold miners, which is currently at 35.64) is headed:
http://www.traders-talk.com/mb2/inde...e=post&id=9840
"A Head and Shoulders bottom started to develop back in August 2008 on GDX. In mid January a Sign of Strength was performed through the Neckline of this Head and Shoulders bottom and confirms the pattern and also confirms the Neckline breakout. Since mid January the market has worked higher and volume has been increasing and a bullish sign and suggests this market has energy to move higher. Support now comes in near 32 on GDX. This Head and Shoulders pattern has an upside target near 54 which is the old highs set back in March 2008."
Lady
Why I bought more GTU and SLV this morning:
"Some economists have been wrong-footed on gold, we think, by treating the metal as a commodity as opposed to a currency. A synchronised global financial crisis and depression is, of course, consistent with falling commodities prices. But exactly the same environment, as we can now see, is hugely positive for gold, what Nathan Lewis in his recent book on the subject referred to as "the once and future money". "
http://www.greenfaucet.com/asia/dilb...d-theory/08160
Lady
What do you guys think of the drop in GDX yesterday? Did it reach an IT top and where do you see support? Currently sitting on it's 50 DMA.
Too many gold bulls out there in my opinion so I think a good shake is in the works.
I would say it is a buy w/ tight stop (maybe 30.50-31.00). Still above MA's and trend pretty much intact, but getting close to breaking. PMO gives sell. It either snaps back here or breaks. Risk / reward wise, it's probably worth a play.
Take a look at Ebb's GDX trading this year. He seems to have it down pretty good.
http://www.etftalk.com/forum/showthr...=1073#post1073
http://www.etftalk.com/images/forum/gdx.gif
I sold my GDX gold miner yesterday because trailing stop was triggered. Made an okay profit, not great after commissions but okay. I'm buying back in as soon as StochRSI moves above 20 (currently at zero for the second day).
Lady
2/25/09 Ord Oracle weighs in on GDX:
"Back in mid January, GDX jumped the Neckline of a Head and Shoulders bottom with a Sign of Strength and confirmed the Head and Shoulders bottom. The Neckline should now hold as support on pull backs. Over the last couple of days GDX has been pulling back and nearing the Support near 32. Today’s decline showed less volume then yesterdays, which implies the decline is weakening. Today GDX closed near 33 and not at support yet. We would like to see Full Stochastics reach below 20 and RSI approach 40 when GDX reaches near 32 to help confirm that the 32 range will hold. We would also like to see a positive divergence between GDX and Price relative to Gold ratio, where GDX outperforms gold for the short term. The Head and Shoulders pattern on GDX has an upside target near 54 which is the old highs set back in March 2008."
http://www.decisionpoint.com/TAC/ORD.html
Lady
Think I will take a shot.
"...Over the last 4 years gold has been moving in 8-month chunks, which suggests that it's under the direct influence of Martin Armstrong's "Pi Cycle", where he identified market timing patterns lasting 3,141 days -- i.e., Pi x 1000 days, or 8.6 years. Armstrong also identified a corresponding 8.6 month cycle and a 4.3 month half-cycle, and it looks like gold is faithfully following this template.
This timing cycle is suggesting that the month of February should end up as the half-way break in this latest 8-month growth phase, which should then take off higher from March to June. We'll have to pay attention to more serious weakness in March -- although I'm definitely not expecting this -- as this could be an early sign that the next 4 month period will be sideways or down.
Getting back to current situation, the big question now is whether gold will bounce at $930, or down at $900.
I actually have a very important fractal target down at $890, so if gold does break down further and head for this area it should briefly overshoot $900, and that will be an excellent opportunity to re-enter back into an initial long position...."
http://safehaven.com/article-12699.htm
Lady
GDX is playing out nicely (thanks bullitt!). Support has held so far and a stop below the low of the recent reversal seems reasonable. Target, low 40's.
http://www.etftalk.com/images/forum/022709.gif