Gold – 16 Jun

Gold closed slightly down from resistance at 1532. Support is at 1515 where we have swing low, the 45 day MA and the Bollinger band. The short term downtrend continues with a confirmed lower high. The symmetrical triangle is apparent and is approaching the apex, a definitive move should reveal itself shortly. It has been awhile since the Bollinger bands have been this narrow, volatility has really dropped off.

Here’s GLD:

PHYS, the 100% allocated gold bullion fund outperformed gold and GLD today and in the process added to its premium to NAV, now at 4.26%. With Greece blowing up and the smell of fear in the air it seems people are willing to pay more for real bullion as opposed to paper bullion. A concern is the megaphone structure that is presenting on the chart. This type of “inverse” triangle is usually associated with reversal. Technical analysis blind to fundamentals is a fools game IMO. The seasonal aspect of gold says gold should be weak until late summer. The reason for gold ownership has never been as powerful as it is today with the EU and the Fed up to their asses in alligators. The awareness of real gold as opposed to paper gold is increasing daily and those who are constrained by retirement funds such as 401ks have little choice in the market place if they desire investment in real gold and PHYS offers it. While support at 13.16 is more stout, I believe support at 13.0 is more critical. The premium to NAV has been much higher and I believe fear and volatility will only be rising in the upcoming months before QE3 is rolled out. My gut instinct is that if the megaphone is going to resolve lower, it will be a modest move. Quite likely we will continue with a range trade for the near future until fear drives volatility higher, resulting in higher gold prices. I think 12.40 is the floor this summer.

 


 

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