Two Weeks Too Early on Gold?

by JDH on September 14, 2019

Two weeks ago I told you I was increasing my allocation to gold.  Last week, after gold had it’s biggest one day drop in three years, I told you I was a week too early.

It would appear that I was at least two weeks too early, as the above chart of gold for the last three months would indicate.  Gold did spike up to over $1,560 on September 3, but has corrected back to just under $1,500 now.

Is this significant?

I don’t think so.  Gold is now back to where it was a month ago, and is still comfortably above it’s 50 day moving average, and well above it’s 200 day moving average, so I am not concerned.

In fact, with a Relative Strength Index at 46, a very good buy point is near.

“Near” but perhaps not “today”, as the RSI is still turning downwards, so a drop to the 50 day moving average around $1,478 would not shock me.  I will postpone new buying for a day or two to see where everything shakes out.

Here’s a longer term perspective, a three year chart of gold:

That’s a much more decisive uptrend line, isn’t it?

This chart shows why I am not concerned.  Gold had three years of congestion, but never fell below $1,000, and has very decisively broken out of that congestion zone.

After the great run it’s head, a period of consolidation is both necessary and healthy, so great, bring it on.

I’m patient.

I’ll wait.

The world is not yet paying close attention to gold.  The news is all about how the markets will likely make a new all time high in the next week or two or three.

I agree, they will, but compare the three year chart of the SPX to the above chart of gold over three years:

The rise in the SPX is not as impressive, and certainly not as large in dollar terms.

Yes, the markets have more room to run, and they likely will, so having a position in the general markets is not a bad idea.

But we must also acknowledge that we live in a volatile world.

It appears that the trade talks with China are moving in the right direction, which is why the general markets are improving.  It is also likely that interest rates are headed down, not up, which helps the markets, but that also helps gold.  Gold doesn’t pay interest, but if your bonds are paying negative interest there is no penalty to holding gold.

So I will continue to hold gold shares until I am convinced that gold has not started a new bull run.

That’s the update.  Let’s see if the title of next week’s post is “Three Weeks Too Early on Gold”.

 

 

A Week Too Early

by JDH on September 7, 2019

Last week’s post described how I was Increasing my Allocation to Gold.  On Thursday, gold was down $35, for it’s biggest one day drop in 3 years.  So either I’m wrong and gold is going lower, or I was early in increasing my gold allocation.

I believe I was early, but not by much.

Three months ago gold was at $1,320.  On Friday it was still decisively over $1,500, so I don’t see a big crash in progress.  This looks to me like a correction, and a minor one at that, so I will continue to add to my positions in the coming weeks.

I believe gold is going higher, but there’s another factor here as well: sector rotation.

The cannabis stocks had a great run, we all made money, but unless there is an impetus for those stocks to move higher, they will stagnant, and investors will continue to sell them; where do they put that money?

What’s the next hot thing?

Gold.

That’s my thought; we’ll see if I’m correct.

More next week.

Increasing Allocation to Gold

August 31, 2019

Now is the time to own gold. Gold last traded at $1,400 in early September, 2013. Here we are, exactly six years later, and gold has finally blasted through $1,400, closing on Friday at $1,529. That looks like a break out to me. Next stop: $1,800 There are, of course, three ways to play the […]

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On the Road

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I am on the road this weekend, so I will simply say this: read what I said last week about gold.  Gold had a great Friday.  NUGT was up 12%, proving my point about volatility. The talking heads on TV will tell you it’s because of trade tensions with China, and that may be true. […]

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Gold: The Perfect Buy Point?

August 17, 2019

Here’s the chart of NUGT – Direxion Daily Gold Miners Index Bull 3x Shares Looks good to me. Since the bottom in May and June, NUGT has more than tripled, from $14 to over $40 before settling in at $35. The RSI is down to a favorable 52, the uptrend looks strong, so it would appear […]

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A Quick Speculation: Rubicon Organics

August 10, 2019

Last week I did a deep dive on gold, and nothing has changed on that topic, so I will give you another quick speculation: ROMJ.CA – Rubicon Organics Inc.  here’s the chart: But wait, you say, that’s a horrible looking chart! It peaked at $3.40 in mid-June, and then crashed to $2.60 on Friday. What […]

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A Deep Dive on Gold

August 3, 2019

For some perspective, let’s start with a look at a twelve year chart of gold: Looks pretty good.  On August 1, 2007 gold traded at $645.  By September 1, 2011 it hit over $1,920.  That’s a nice triple in four years, but from there the correction began, culminating in a drop to $1,046 at the […]

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Great Week for Tesla (if you were short)

July 27, 2019

As regular readers of these ramblings know, I am not a fan of Tesla.  I believe that electric cars are the future.  I don’t think we are quite there yet.  Battery technology needs to improve, and we need to find a better way to generate the electricity that will power these cars.  (Burning natural gas […]

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NUGT – The best way to gamble on gold

July 20, 2019

Let’s talk about NUGT – Direxion Daily Gold Miners Index Bull 3x Shares, an ETF leveraged three times to the underlying gold shares.  If gold is going up, and I believe it is, you have a few choices: Buy physical gold – good idea, but you have to store it, which is not particularly convenient, […]

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Gold and Bitcoin – Both Looking Good

July 13, 2019

Now that gold appears firmly ensconced above $1,400, let’s review the charts: Here’s the conventional chart, gold, in US dollars, over the last three months.  An approximate double top was formed around $1,440, with a subsequent pull back to under $1,390, so gold must either break below $1,400 or back to $1,440; one of the […]

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