Tuesday, August 14, 2007

Gold Stocks Are on Sale

I have already made one post today, so I'll keep this one short, and let the charts do the talking. I will say, that if you are like me, and you own gold stocks, then you are probably in a bit of pain right now.

This post is meant to show that it would probably be imprudent to sell gold stocks at this time. Here is a daily CandleVolume chart of GDX:


Next, let's have an update on the US Dollar. The US Dollar Index closed at 81.49, which is a penny shy of the 81.50 resistance level. I really don't think that this is a coincidence:



Finally, in the post I made this morning, I said that the Euro was close to its long-term upward sloping support line. Well, now it's touching it, and this should provide some relief to gold stock should this support hold. If this support fails to hold this week, I will be forced to sell my gold stocks position.

Finally, here is a daily chart of the Euro, and notice the gap support:


If you agree or disagree with my analysis, then please do write a comment. I would love to hear from you. Thanks again for looking at my blog, and good luck trading.

3 comments:

STOCK SNIFFER said...

Good luck with your current positions. Being from Arkansas and knowing Bill Clinton I am tempted to tell you, "I feel your pain". But, I too think we are close to a tradeable rally in gold stocks. However, if spot gold breaks $661 get out of the way of a massive train wreck. You will remember that I bought on July 2 and closed that trade at a minimal profit July 27. These are the times that exercising trading discipline is the hardest part.

Archarito said...

Danny,
You have great posts. Now if my memory of the gold charts I've seen from the 1930's serves me correctly if seems the gold stocks trended gently down for quite a few months before they began to trend upwards in an increasing steeper trend.
It seems it wasn't until the widespread general public faced the depression face to face that the value of tangible metal actually took the place of fiat currency and was esteemed.
The erratic gyrations and manipulations by the Central Banks, the Brokerages, the Plunge Protection Team and the inherent chaos represented by the derivative markets that we have now, seem to toss all traditional logic to the wind.
I am 98% cash. It's challenging to know for certain where things are headed.
Gold will probably trend upwards soon; especially with the beginning of the middle east wedding season and when the global markets realize it's cheap.
When it starts rising it should stay up trend for several years at least.

Danny Merkel said...

stock sniffer,

Thanks for that insightful comment. I do remember when you said to me that you got out of gold stocks and into cash. That was a good move.




archarito,

I think what you said about gold stocks during the depression is correct, however, I could never confirm it, since StockCharts.com doesn't let me go back that far.

I feel as you do that gold will soon get back into an uptrend soon.