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Gold Entering New Uptrend?

gld

As readers of this blog and clients of my Wealth Management business know, we have been bullish on gold for some time. We’ve ridden it up to 1,000 and back down a few times as I believe we will break out at some point in a strong move up to our target of 1300 (1000 previous high less 700 previous low = 300, add 300 to previous high of 1000 for 1300 target).

I do not know if the current break above the downtrend will break through the 1000 resistance level we’ve bumped up against roughly 4 times in the last 15 months, but I thought I’d share the chart of the GLD exchange traded fund. You can see that we have broken above the pink downtrend line I’ve drawn and we have broken above both moving average resistance lines.

Additionally, you can see in the lower section of the chart that GLD has started to be under accumulation – money flowing into something always pushes the price up at some point.

This has the potential to be the story of the Summer if the rest of the market is range bound. Or, it could just be a head-fake like the previous 4 attempts to break through 1000. Two things are common from a historic perspective: stock prices that bump up against resistance several times then break through tend to behave like coiled springs, and commodity producing companies tend to move with more velocity than the movements of the underlying commodities. So if history is a guide, when gold breaks through 1000 and moves up to 1300 (a 30% move), the likelihood is that the miners will have a greater than 30% move up in price.

Keep an eye on the price of gold. It could make you some money.

Mark