Gold at the 2017 Half Way Mark

by JDH on July 1, 2017

So here we are, at exactly the half way point in 2017, looking forward to the start of the real summer vacation season.  Happy Canada Day, and Happy Fourth of July.  As for gold, not so happy.

Over the last month, gold has traded in a range, roughly bound by $1,257 on the top, and $1,241 on the bottom (I ignore the little spikes, the tails on the candles, to filter out the noise).  It was around this $1,241 level that gold ended the trading week. It is easy to see that the $1,240 level has provided major support, seven times over the last month.  That is strong support.  If it holds, gold can move higher.

I don’t expect it to hold.

I expect gold to go lower.

While there is apparently strong support around $1,240, it is clear that we have had at least five “lower highs” this month, and that’s not good.  Eventually lower highs become lower lows.

I expect that we will see a significant bottom in gold in July, probably towards the end of the month.  I have no idea if we will see panic selling or not, but I expect lower gold prices.

My guess is that we will then consolidate in August, which will be the opportunity to “load up the truck” and fill your boots with, what will be at that time, very inexpensive gold shares.  I’m expecting the fall to be great, with a nice increase in gold.

So, I continue to hold DUST – Direxion Daily Gold Minders Index Bear 3X Shares and JDST – Direxion Daily Junior Gold Minders Index Bear 3X Shares, leveraged ETFs that go up when gold shares go down.  I expect to sell them in July, and have cash for the bargains I expect to see in August.

With a short trading week this week we may see volatility, or nothing, I don’t know.  I do know that I will be watching the $1,240 level very closely, and if it is significantly breached, I’ll know I was correct to be on the short side of gold.  We shall see.

Enough gold talk.  It’s a long weekend in the summer.  Enjoy it.