Asset Divide: Base Metals and Gold

Includes: DBB, GLD
by: Doug Short

Technical analyst Chris Kimble, a regular contributor, takes look at the contrasting patterns of Base Metals and Gold.

Chris comments: Base Materials ETF (NYSE:DBB) is breaking a lower support level of late, in what seems to reflect a softness in the global economy.

Gold continues to push higher, ever higher into a narrowing wedge that has to end soon.

Often times precious and base metals are on the same price road, yet since January of this year, they are heading in different directions.

Will they get back on the same road again? If so, which direction will that road take them?

Plus, a look at its Legs

Chris comments: Multiple bearish technical patterns are taking place for gold right now, a rising wedge, Fibonacci resistance, not to mention bullish sentiment above 90%.

Does this mean that the "Power of the Pattern" will win again? Odds say yes, yet rising wedges are incorrect 35% of the time and investors should have a plan if gold overpowers the patterns.

If gold breaks above this resistance, the Fiboncacci expansion price target for Gold would be around $1,800 per ounce, about a third higher than current prices.

Should this breakout take place, even though gold has done well for the past few years, we'd be looking a yet another new leg up for Gold.

For feedback or more information, email Chris at