Not Looking Good for Gold (So You Should Buy)

by JDH on June 10, 2017

The gold chart is not encouraging (so I’m probably interpreting it incorrectly, so you should probably be buying……..).  As my proxy for gold I use NUGT – Direxion Daily Gold Miners Bull 3x Shares NYSE + BATS because it’s 3x leveraged to a basket of gold miners, so the swings are more pronounced.

Here’s the six month chart (click to enlarge):


As you can see, the primary trend is down (the red line), although the optimists in the bunch can also find a blue uptrend line.  So which will win?  I have no idea, so at the moment I am on the sidelines, in cash.  I own no NUGT, and I have liquidated a lot of my gold holdings, content to sit in cash.

Here’s the chart that worries me, the one month chart of NUGT:

As you can see, NUGT hit $38.93 on May 17.  On June 6, NUGT got almost all the way back, touching $38.80.  Unfortunately, almost is not good enough.  Had NUGT traded above $38.93 it would be “off to the races”.  Unfortunately, now it’s a double top, and that’s why NUGT closed at $34.18 on Friday.

My guess is that the near term bottom is somewhere in the $32.50 range, so I may dip my toe in with a small position around $33, and then buy more on a dip to $32 and again at $30.50, but I have no plans to play with any serious money.  Too risky.

Also, it’s summer, the weather will be great this week, so I plan to enjoy it.  We wait all year for this kind of weather, so no point in chasing meandering stocks when you can be outside in the real world.

That’s the plan.  Thanks for reading.  See you next week.