A look at the gold sector (October 31, 2014)
I want to look at gold ( NYSEARCA:GLD ) here and here’s why. The Bank of Japan basically, I don’t know what the heck they did, it’s like free money over there, those guys basically all of my adult life have had an economy that really, really stinks and they just keep doing the same thing.
So the bottom line is the dollar has skyrocketed, the yen is plunging. What is this doing with gold? We’ve got no sign of inflation what so ever. We’ll look at the Commodities Tracking Index ( NYSEARCA:DBC ); this looks like it could go, well you pick a spot, I don’t have one. This is clear back in 2010 when it was down here. So what I’m saying is gold is not where you want to be. We can go back here and see ( NYSEARCA:GLD ), it’s like “Hey man, this is a good buying opportunity.”
It probably is due for an oversold bounce, but look at the weekly chart ( NYSEARCA:GLD ). This has been like a hockey stick for quite a while, only now we’re seeing that the hockey stick is pointing downward instead of upward; so I just think that you’ve got to stay away from gold. Look at Goldcorp ( NYSE:GG ), this is a mess, but then if you look at the daily chart, this may be like you’re one trade, and that would be an oversold bounce here. It actually closed up on the day, but look what happened intraday; this thing was just a nightmare, so you probably get a little bit more of a bounce there.
Yamana Gold ( NYSE:AUY ), it’s probably going to take another day or two, maybe not, but the bottom line is this is still a falling knife, you can see the really high volume here. I just think you don’t want to be anywhere near the gold stocks with the dollar as strong as it is. This is on a breakout and you know all these things including oil are denominated in dollars. If the dollar’s stronger it doesn’t take as many of them to buy an ounce of gold, or a barrel of oil for that matter. I think you just stay away from these commodity sensitive sectors right now. No gold, no silver, just stay away from it, unless you want to take this oversold bounce ( NYSEARCA:GLD ), but even then I want you to be careful.
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