Gold, The Next Shiny Thing

There is a micro gold contract for 10 ounces. Maybe it is simpler to take a position in GLD (if one is so inclined) but the futures margin is only about $350 for the gold contract and it is possible to take delivery.

Gold Monthly

The 39 month moving average has started sloping upward, whereas the 13 month has been gently sloping down for the last year.

Someone who went long at 825 in October 2008 and sold above the 23.6% fib line at 1749 between August 2011 and January 2013 deserves to earn the long term gold trader merit badge. For the last 6 or 7 years the price has been oscillating around the 61.8% fib line. I vote for a bottoming as opposed to topping interpretation of this pattern.

The main question is how much heat an investor can put up with as there is no good place for a stop. There are two bad things that could reasonably happen:

  • Price probe of 39 month moving average at 1322 or 13 month at 1284.
  • Price probe of the three major lows formed at about 1200 which has held since February 2016. This is an area that corresponds to a congestion area lasting from 2008 through 2010..

Gold Weekly

The fib lines are upside down in this chart compared to the monthly. Doesn’t seem to matter except for consistency, but I know at least one of them is right.

There appears to be strong resistance around 1360 corresponding to the 76.4% fib line. Above that area, 1420 appears to be an achievable target. The action here has not been inspiring over the last 2 weeks and 1330 or 1305 (13 week moving average) are cheaper reasonable entry points.

The move from 1200 to 1360 was $160. 1280 (the swing low) + 160 = 1440.

Gold Daily

The uncertain recent action seems mostly centered around the Fed. Gold does not play a two up rate of change state very well. It made money on a long signal on May 29. The 2 up cycle is 5 days old and not much above break even.

I’m not inclined to go long here, 1303 looks like a nice price near the 54 day moving average.

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