Has gold bottomed? Is now the time to get into gold (GLD)? Here’s my take.
Discussed in this article: SPDR Gold Trust ( $GLD )
Let’s look at gold, GLD ( NYSE:GLD ). This was actually getting a lot of play on the financial news today because it was up almost 2 percent. The big question is, is this finally the end of the gold decline? Is this the time that traders are going to get into gold because we have this double bottom here? So this is what we’re looking at; here’s what I was thinking because I own gold, physical gold, not a boatload but I own some of it and I’ve had it for a while. It’s declined in value but since I’m not looking to sell it now or for the foreseeable future, and I can foresee a long time. It’s just an asset of mine that I own, it’s not a big deal at all, but I do watch GLD ( NYSE:GLD ). I have not traded any gold stocks, basically for this entire downtrend, because it’s too choppy and there are too many other good opportunities for me to want to short this stuff.
I listened to all the yammering about gold today, and the one thing that I was thinking as a trader was, what else are they going to talk about? I mean most to the sectors are down so you’ll talk about profit taking, you’ll talk about this, you’ll talk about that, but everybody wants something positive, and everybody wants something that will keep your attention. So the deal is, okay let’s look at, oh my gosh gold ( NYSE:GLD ), first day of the trading year in 2014, the first day of the year everybody’s buying gold, so it’s time to pile in. I don’t think so, this is the yearly chart, the downtrend is intact, yes I see a different character here, but make no mistake about it the downtrend is intact. The 40-week moving average, or 200-day moving average is down. The 20-week moving average, which is the middle Bollinger Band, is down, price is down below of those, so we’re getting still lower highs and lower lows.
I see this here, but I guess the question that you want to ask yourself on something like this is, do I want to pick this as the bottom? And do I want to hold this through all of the slop that’s naturally going to occur from all these different resistance levels as folks that are in gold, and they’re not happy about it, sell gold? So you’ve got all these different resistance levels, is this where you want to be buying right now, because you’re betting that this is the bottom here? I’m looking at this and I see a whole lot of wide area there that could be filled. Now I’m not saying that it’s going to be filled, but what I’m saying is, I see it, and I think that you’re expecting the unexpected, which is something I do from time to time, but typically not; you’re expecting the unexpected if you think that gold ( NYSE:GLD ) is going to bounce off of here and then it’s all good in the hood, I just don’t see it happening.
So my suggestion would be to stay away from gold ( NYSE:GLD ) and get into the stuff that’s actually working, that you don’t have to wonder about whether the bottom is in, but you have to wonder whether the trend continues. I’ll say it again; you want to stay away from something where you have to wonder if the bottom is in. Instead you want to be in things where you’re wondering is the trend still intact, is the trend working? That’s where I want to be, that’s where you should be.