Gold – 27 Jul

Gold set a new all time high and then succumbed to a minor bout of selling and closed below resistance at 1624. Support is still the 1581 level, but 1610 has to hold to maintain the uptrend. The 18 day moving average is climbing smartly to the major support zone at 1581. The 18 day MA will be key if stochastic loses embedded status and will become the initial price target. Some divergence is showing on the chart between price, MACD, and stochastic. This may indicate that price is likely to retreat here and test the support levels below. This up trend has been in place for nearly the entire month and may be due for some consolidation. A deal on the debt limit may be enough to roll gold over. But, we all know that more debt is constructive to higher gold prices and lower dollar values, so any weakness in gold will be transitory.

Our wonderful and 100% allocated gold bullion fund, PHYS, closed right at support near 14.0. This fund is a great choice for people who want exposure to gold bullion but cannot purchase physical due to retirement plan restrictions. Resistance is still at 14.22. The 13.75 level roughly equates to the 1585 level in gold and is the major support zone on the chart. Technically speaking we currently show an uptrend with a higher high and higher low in place. 13.80 must hold to sustain the uptrend. RSI is not over-sold as is the case with gold, and the divergence between price, MACD, and stochastic is not present. This fund appears to have completely digested the follow on offering and will attract new buyers due to its low premium to NAV price, currently 2.42%. I expect this fund will continue to grow and will increase in popularity as the physical supply of gold starts to dry up as it is doing in silver. The silver version of this fund, PSLV is currently trading at a 20% premium to NAV. People buying this fund have a choice between it and SLV, which is loaded full of “paper” silver, and investors are rightly deciding that the real thing is superior to smoke and mirrors. The same thing will happen with GLD, which is loaded full of “paper” gold. A climbing premium to NAV in PHYS will indicate growing demand and scarcity of physical gold.

This entry was posted in Gold, Matrix Sentry TA, PHYS, Technical Analysis. Bookmark the permalink.

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