Stocks and commodities occasionally provide a wedge-shaped graph of prices vs time. The price of an exchange-traded gold fund (GLD) and a gold mining stock (THM) are illustrated in the graphs. Note that the wedge formed by lower highs and higher lows. The MACD first fell then began to increase toward the breakout and broke above the neutral value. Here is another version of the graphic, the actual gold price. Notice the huge jump in two days:
Note also that the breakouts took place on high volume. That is significant; the breakout is not a fluke of trading on low volume.
What happens now? Gold will challenge the $1000/oz price (or the $100 share of GLD). Will gold break the $1000 price? I think it is more likely than not. Why? The FED continues to print money, the economy is sub-par and there is NO hint that Washington will do the right things to grow the economy.
DISCLOSURE: I am long on THM and a couple of other gold mining stocks. THM has a property in Alaska (near Fairbanks) that has 10M ounces of gold that has been found or is inferred on the basis of incomplete drilling data. It is the biggest gold find in modern Alaska.
No comments:
Post a Comment