Are you following the Goldman Sachs analyst on gold? Maybe he’s right…and maybe he’s not. Here’s how to tell the difference. (February 23, 2016)
GLD GDX NUGT GLD NUGT
I want to look at gold ( NYSEARCA:GLD ) today, specifically just kind of the relationship between gold and the Miners. Look, there was a guy, I forget his name, I apologize, you probably know I’m talking about this on Fast Money today. This is gold ( NYSEARCA:GLD ), I’ve talked about this before, that this was a key breakout. That was a key breakout. Boom! Reversal. Boom! Reversal. Boom! Reversal. I’ll let you fill in your own reversal. Boom! Reversal. Boom! Holy crap! We got a breakout on volume. So this is what I call a power move. It’s big volume, big move in a direction where it kind of wasn’t supposed to go. So there’s something new that’s happening here in gold again. This is a weekly chart. Now, some analyst at Goldman Sachs was on CNBC and they were asked, “Should you sell gold?” And as most analysts are, always confident, occasionally correct, he said, “Absolutely you’ve got to sell gold.” I’ve been looking at charts for 20 years, I can’t say absolutely you’ve got to sell gold. I can say this, this stock is in a little bit of a flag pattern, kind of a lot of a flag pattern. I would sell gold if it went up, we’ll mark this here, we’ll drag this up. If gold goes up to 126.00, something like that, that’s 1260.00 and ounce, I’d be looking at selling it. Or, if it starts falling back, then I’d be looking at selling it too.
But right now, you can’t make that judgment. You can’t make it on the weekly chart, you cant’ make it on the daily chart. If this were TRULY, if this were truly like a blow-off top, to where that’s the end of that. If it were, first of all we wouldn’t have this back here. This would be in the absolute upper right hand corner, otherwise known as the winners circle. It’s almost there but we would have been getting this kind of move and then finally, straight up, then you get the crashing down. We didn’t get that. We’re still up here, still overextended, no question about it. Look at the volume, no question this is overextended, it needs to pullback. That’s it, it pulled back here, .6, not even a percent. Then this was a big meltdown here, down 3 percent, that’s the end, parabolic move. Hey, it would shake just about anybody out if you bought here above the upper Bollinger Band. Well, now we’ve got this. Is this REALLY the time to sell? This is really what we’re looking at here, this is actually more of a pennant. Lower highs, higher lows, here’s the flagpole, this is what you’re looking at, any technician is going to tell you that, any good one.
Now, how do we trade it? We can trade it with the GDX ( NYSEARCA:GDX ), the Gold Miners. We can trade it with the GDXJ ( NYSEARCA:GDXJ ). Pick your poison, that’s fine. I trade it with the NUGT ( NYSEARCA:NUGT ) here, the Gold Miner’s Bull trifecta Shares, you get triple your fun. So the way this is shaping up, I look at this, you don’t need to trade options on this thing. By the way there are options available and they are about 9 miles wide between the bid and the ask. Don’t go there. If you want to buy any let me know, I’ll sell you all you want, as long as you’ll buy them on the offer. So this is giving us the same kind of a pattern. What we want to be doing is, looking for the resistance here and it is at 57.00. The reason that I’m kind of chuckling to myself, I don’t find me that funny, but the reason is because if this thing blows through 57.00, this thing can move. If you look at it today, it was up sure, but it is just still in consolidation and it was up about 6 percent.
So what I’m saying is, if you are correct on this move, in that when it runs up and the high here was actually 56.89 and it was above the upper Bollinger Band. Now if it hits there it’s well within the upper Bollinger Band. If we get up to this level this thing could push through 60.00 and beyond pretty quick. So what I’m saying is, don’t be so quick to just sell gold. I’m not a real gold freak or anything, that’s not my deal, those days are long gone. But this is a trade that still has a ways to go. Watch for more of an upside breakout. If you’re not getting it then everything that I said, you should just sit there and go, “Well I wonder if Dan’s wrong or just early?” But I won’t be right. So if this does not breakout don’t be piling in here. We want to be REWARDED for our OPINION but we don’t want our OPINION to be against the price movement on the chart. In other words, you can have strong conviction in your opinion but just don’t let that conviction trump your discipline. Always have to know what needs to happen in order for you to be right. That’s what I think. You watch for the breakout, you hop on board, ride this bad boy to victory.
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