Gold – 19 Aug

First of all, thanks to all my friends who offered condolences on the passing of my mother. I appreciate the thoughts and well wishes and also the Happy Birthday greetings as well. I wish you all the very best and implore to you live your life on your terms and live it well.

What can you say about gold other than it is doing what it has done for thousands of years, its providing a haven for stored wealth during times of uncertainty and chaos. Gold has been in a sustained and accelerating up trend since the beginning of July, and has now tacked on $400. Yet, where is the the parabolic move that leaves gaps, an inverse waterfall if you will? It isn’t on this chart. That speaks to an orderly move that recognizes the reality of the situation rather than group delusion. This move can go much higher. Look at the volume that continues to build after a 2 day reaction lower. Volume suggests there are plenty of buyers available at these lofty prices.

The trend has accelerated and now tracks a steeper angle. This speaks of unspeakable possibilities. It speaks of a possible move through 1900 and on to 2000. Round numbers are milestones that provide resistance. 2000 will likely be a tough one like 1000 was. Be prepared for a hard and sudden retrace in the near future. Do not listen to the perpetual top callers calling for the demise of gold. That is silly. If you must trade, pull some off the table with the knowledge that risk lies in being out of this market, not in it.

RSI is making a respectable living it seems above 70 and in over-bought territory. This is not supposed to happen by the way. But, it is happening now and illustrates how technical analysis is starting to lose its meaning in gold. It should not surprise that unprecedented times will also create unprecedented chart patterns. Stochastic is embedded, again. So we have technicals off the chart, volume rising, and trendlines steepening with no gaps or abandoned babies. Buckle you seat belt Dorothy and say bye bye, this isn’t Kansas anymore.

Resistance is the all time high set overnight at 1882 with the Bollinger band just below at 1872. Support is the last swing low at 1725, with the 18 day moving average also supporting at 1719. Fibonacci support at the 38.2% retrace is also adding another layer of support around 1728. A smackdown will seek this level and as long as the swing low at 1725 holds the up trend remains intact.

The real and 100% allocated gold bullion fund, PHYS, is charging ahead and building premium in its price. Today’s close puts the premium to NAV share price at 4.79%. GLD trades at a discount folks and the market says a premium deserves to go to real gold at PHYS, please take note and get the Hell out of GLD for anything other than a derivative play.Unlike the spot chart, this chart has a gap between 15.75 and 16. The price got a little ahead of gold and is why the candle shows black, retracing from the open. The volume is still good and it is a pure play on gold bullion, therefore will track just as the spot chart will. Many times gaps come in threes, a opening and breakaway gap followed by a mid-move gap, and finally an exhaustion gap at an interim top. This suggests a possible exhausting gap around 17.50. Lets watch for it.

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