Tuesday, December 13, 2011

Gold Update - Trendline Break

Click on Chart to Enlarge

The chart above is the GLD gold ETF. The red line is the trendline up since the 2008 low in gold. I had mentioned before that a break of that trendline would likely lead to sharp losses in gold. Yesterday gold gapped down from above the trendline to below the trendline. I always view that as significant. Based on everything I've shown in recent months I believe gold is most likely to continue its break down. There may be a backtest of the trendline here shortly after a break, but then any fall to new corrective lows, would be another sell point.

Silver is about 3% above its corresponding trendline and it really has space under it to fall.

I have us positioned in the blog trades to benefit from a general deflationary theme here in the coming weeks. Essentially we are short gold, oil, and stocks, and long the US dollar. The TBT trade is still open which makes us short bonds. If the other markets play out as expected I think the bond market may push up to new highs at this point, but unless it gets stopped out, I'll continue to hold.

1 comment: