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John Lounsbury, Managing Editor and Co-founder of Global Economic Intersection, provides comprehensive financial planning and investment advisory services to a small number of families on a fee only basis. He has a background which includes 34 years with a major international corporation, 25... More
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  • Gold In The Danger Zone 6 comments
    Apr 9, 2013 7:57 PM | about stocks: GLD

    The Daily Reckoning has an informative chart today, although I do not agree with the conclusion they emphasize.

    (click to enlarge)

    It is true that 1,550 is a strong support level for gold. But it is not the last defense. There are support levels at 1,480 and in the 1,300s.

    Some time ago I looked at long-term uptrend support lines for gold.

    Taking a longer view, let's look at a 20-year perspective with a graph presented last year:

    (click to enlarge)

    You must extrapolate almost two years to the right to get to today. If you eyeball that extrapolation the five-year trend line support is in the vicinity of 1,100-1,120 and the ten-year trend line support is around 1,020-1,140.

    Now those levels are 30% to 35% below the current price, but that is where you have to go to say the long-term uptrend for gold is over.

    However, if gold does go back to test long-term trend lines, and you hold all the way to that test, you certainly will not feel like you may still be in a long-term bull market.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: GLD
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Comments (6)
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  • DigDeep
    , contributor
    Comments (2375) | Send Message
     
    Nice analysis John. I'd think if QEternity slows, that's the tipping point for touching the 1300's. If they discontinue QE - a definite drop.
    Not sure - would be good to know - what the BoJ's printing does to gold in USD terms.
    9 Apr 2013, 11:59 PM Reply Like
  • Dr. Kris
    , contributor
    Comments (329) | Send Message
     
    John,

     

    Technically, a break below $150 major support in the $GLD would signal a drop to $145 but more probably to $140 major support.

     

    With all of this global QE, I don't doubt commodities could go lower...but they will spring back with a vengeance at some point.

     

    Dr. K
    12 Apr 2013, 01:18 AM Reply Like
  • John Lounsbury
    , contributor
    Comments (3979) | Send Message
     
    Author’s reply » Kris - - -

     

    Gold down almost $60 this morning. Guess we'll find out where support is soon. :-)

     

    John
    12 Apr 2013, 11:58 AM Reply Like
  • Mayascribe
    , contributor
    Comments (9977) | Send Message
     
    John: Good to see you.

     

    One has to wonder what's going on with gold, with...someday, knowing the delayed Basel III will kick in, and then gold will be regarded as a Tier One asset.

     

    Last night I poked around a little and couldn't find anything new regarding the implementation of Basel III.

     

    Wondering if there's some accumulation going on with the physical in Central Banks....

     

    I wouldn't touch any miner right now, but some, like NovaGold, the pricing is so low it's almost indecent, especially because they've just exercised $54M in warrants, and have $300M in cash on the sheet. Down ~10% today, and approaching 4 year lows.

     

    Also, compliments on GEI. Now part of my daily regiment.
    12 Apr 2013, 01:12 PM Reply Like
  • John Lounsbury
    , contributor
    Comments (3979) | Send Message
     
    Author’s reply » Midday Monday 15 April - Gold is "hanging" at $1360 +/-. This is the bottom of a congestion region between 1,350 and 1,400 in late 2010 and early 2011. This could be the support level, or not.

     

    If not the next major congestion (consolidation) level is in the 1,100s (late 2009 through first half of 2010) and this also is the vicinity of the 5- and 10-year trend lines. The move is half way to this ultimate support level from the 1,550 last seen two days ago.

     

    We could stay where we are today for a while or the ultimate support could be tested this week. There is not much standing between 1,350 and the 1,100s if we break through 1,350..
    15 Apr 2013, 02:52 PM Reply Like
  • mannoj
    , contributor
    Comments (3) | Send Message
     
    Take the s &p up. Its sure to fall
    29 Apr 2013, 04:29 PM Reply Like
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