Sentiment Speaks: Gold Is In A Precarious Spot

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Includes: AAAU, BAR, DGL, DGLD, DGP, DGZ, DZZ, GHS, GLD, GLDI, GLDM, GLDW, GLL, IAU, IAUF, OUNZ, PHYS, QGLDX, SGOL, UBG, UGL, UGLD
by: Avi Gilburt
Summary

Gold will likely be much higher in 2020.

The question is how much lower does gold have before its next major rally, if any.

We are finally setting up again for another major rally attempt.

My mother told me that if I did not have anything nice to say, I should not say anything at all. Well, that is why you have not heard from me about GLD for quite some time. When I wrote about it last, many were certain it was going to break out again, but I suspected we would continue to consolidate, and we have.

So, there has been nothing for me to really add to the conversation for months, so I have been rather quiet regarding the metals.

There has been no more frustrating chart to track than GLD over the last 3 years. It has had several setups in which it could have broken out and has broken each of them over this period of time. But we are now coming to the apex of the length of time in which it can continue to consolidate before it breaks out.

However, as I write this update, the metals are in a precarious posture. While we correctly called for the recent “bottoming” in the complex, the rally thus far has been quite lackluster. In fact, if it does not follow through to the upside in the coming week, it could easily roll over and drop much more than many currently expect.

So, we are now at a point of inflection. And, I will describe what I am generally seeing through the lens of GLD.

To put it quite simply, a 5-wave structure provides for us a primary trend, whereas a 3-wave structure is suggestive of a corrective structure. And, thus far, GLD only has 3 waves up off last week’s low. If GLD can muster a 5th wave higher in the coming week and pull back correctively thereafter, then we have our first indication of the next bull market phase having begun. And, my minimum next upside target for that structure is the 138 region, and rather quickly.

However, should GLD fail to muster that 5th wave higher and then break below this past week’s low, it points us down to the 113-115 region from where I would then expect it to begin its next major bull phase, also pointing rather quickly towards the 138 region.

Housekeeping Matter

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: While I am net long the complex, I took out a hedge last week using the GLD, and will stop out of it when it proves to have bottomed.