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David White is a software/firmware/marketing professional and a long time investor. He has worked in the networking field, the semiconductor equipment field, the mainframe computer field, and the pharmaceutical/scientific instrumentation field. He has bachelor's degrees in bioresource sciences... More
  • GLD Just Broke Above A Significant Resistance Level 3 comments
    Apr 12, 2010 6:02 AM | about stocks: GLD
    We have had a lot of good economic news lately. The auto sales in march were better than expected. The jobs numbers were lower than expected, but they did not include as many Census jobs as had been predicted. The "core jobs number" was actually higher than expected. The ISM numbers were great. Bond yields and commodity prices have been going up, but not too much (i.e. some inflation). Plus the EU seems to have come to a more "real" bailout solution for Greece this weekend. This is great economic news for Europe. This would all seem to mean that gold is going higher in the near term. The GLD ETF chart would seem to give credence to this thesis. See below:



    It indicates that GLD has just broken through a significant resistance point. With the good economic news on many fronts (for example, South Korea just upped its GDP estimate for 2010 to 5.2%), there doesn't seem to be a good reason that GLD should not rise higher. The chart would seem to indicate it will. The chart indicates that the next stage of upside should be clear sailing to the $119 to $120 range. You can place a stop at approximately $112 to play this upside move. GLD may go higher than $119 to $120, but we will have to wait to evaluate the GLD situation and the economic news at that time. For now the near term move looks like a good play. If the economic news turns dramatically sour with earnings, that would change this outlook.

    Disclosure: no postion at this time.
    Stocks: GLD
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  • Author’s reply » The eruption of the Icelandic volcano may have thrown a monkey wrench into this trade. The ash from the volcano has turned Northern Europe into a no fly zone. This will have a negative impact on airlines' business, on business travel, on tourism, on health, on clean up costs, etc. Can you imagine going to one of the many sidewalk cafes in Europe with ash raining down on your head? The economic impact will be considerable if this volcano continues to erupt.

     

    This seems likely to make the USD go up relative to the Euro. This in turn may make gold lose value. This now seems more likely to be a failed break out of gold. It might be best to abandon this trade for the moment. If the volcano situation becomes more clear, you will always have the opportunity to get back in.
    16 Apr 2010, 03:34 AM Reply Like
  • One day of nasty weather can completely clean the atmosphere. This story can disappear as fast as it arrived. Even so it's not the ground level that's being affected in Europe (for the most part) it's the higher altitudes. Commerce is basically unaffected on the ground...in England at-least.
    16 Apr 2010, 03:34 PM Reply Like
  • Author’s reply » bigazul: Actually the cloud has lowered as the ice of the glacier has melted near the cone of the volcano. It is no longer trhowing the ash as high. Plus the scientists say the ash falls to earth eventually. Apparently it falls to earth faster the lower down it starts. You can look at it as just bad smog, but it is probably more toxic than that. The particulate matter is supposed to be glass-like. This means it can cut your lungs when you breathe it. You already have bacteria in your lungs. When your lungs are cut by this glass-like material, that makes you more likely to get sometimes serious infections. Add to this the high concentration of flouride in the ash, which is highly toxic. You have something that many may want to avoid. Are more of your neighbors getting sick? The ash cloud could be the culprit. Are your eyes a lot more irritated? The ash cloud could be the culprit. Is this something a lot of people may choose to avoid? Very possibly it is.

     

    GLD has recently been going up again. It may be that my chart reading (showing a near term move to $119) may have been better than my though process about the effect of the ash cloud on GLD. Or it could simply be that the faith in all currencies is now being challenged. That could be pushing GLD up. Plus India and a few others have recently started buying more gold for jewelry, etc. Apparently it is getting renewed commercial demand even at these high levels. It closed at $115.73 today.
    4 May 2010, 02:26 AM Reply Like
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