GLD - Feb 01, 2009

charts courtesy of stockcharts.com

Let’s talk money.

Gold continues to perform and I continue to enjoy despite the fact that I do not believe this move is going to last for long.

I actually take some perverse pleasure out of being on the long side of a move while I am continually expecting an end and a reversal.

As a market participant, I have had my share of good plays and bad plays. There, however, been a very few occasion where I have been particularly pleased with the way I have played an issue. This recent move of Gold is one such occasion.

In a post of January 14, I wrote

next meaningful buy signal (open to your definition) may provide at least a tradable bounce. It is getting oversold fast, and, usually, not always, first drops after significant momentum peaks provide meaningful bounces, if not a continuation to the trend.

Then, in a post of January 18, we discussed how there could be

a great shorting opportunity or a great buying opportunity

depending on breakout or break down from a tight situation

Then, in post of January 23, I wrote that I would have liked to see

GLD to get seriously overbought before any major giveback appears.

And

If that does not happen right away, I would like to see shallow pullbacks that get bought.

Good old, faithful, sound money of all the past millenniums has been doing everything right.

But the reason why I am rather pleased with this is that I still do not believe in it, and I have managed to keep my doubts and reservations out of the game and let the charts lead situation after situation.

Where are we now?

Big tests are lining up.

First major peak that is not part of the present uptrend, then the downtrend line from March 2007

The performance of Gold stocks ETF GDX has turned flat against Gold. I believe that producers should outperform the commodity to keep the picture healthy. I think this is a situation to watch closely to see if we detect further signs of weakness.

GLD’s wave count is not all that clean and shows overlapping waves, and that’s one reason I am hesitant to join the party that claim all fiat currencies will go straight to hell and gold will go straight to the moon.

That has made me wonder that maybe the low of November was not the end of the decline from the peak of April 2007, and rather, the October low was the end of that decline in wave terms


the alt c count is to account for a possible sideways move like a triangle a-b-c-d-e or an abc-x pattern.

Maybe my doubts and reservations are leading me away from the lifetime opportunity of the next super duper bull run of the millennium. Maybe I am just looking for an excuse to find a bearish scenario for a bull. I will continue to hold my position as long as the current trend runs.

So, I will treat my not very bullish arguments as food for thoughts, or what-if scenarios. Especially, since I have been in this from much lower prices. I may take some, if not all, off at first sight of trouble (aka sell signal), particularly if momentum starts to lag.

But, the trend is up, and we cannot be sure how far the madness of the masses can carry it till it exhausts itself.

Let us look ar the performance of some gold stocks against the gold ETF. Some leading diggers are looking tired. It might be just a rest before next launch towards the eventual landing on the moon, but I'rather be cautious

Some are advancing still. Some early leaders have been a bit slow recently. It may be that money is being rotated into laggards. I think it's a situation worth monitoring.