Central Gold-Trust: 3 Jul

My proxy for physical bullion and the fund I use for trapped money in company sponsored retirement funds, GTU (Central Gold-Trust), has established a new short term up trend. We now have a higher high to go along with yesterday’s higher low. Perhaps a new intermediate trend channel is in place, so I will show it for the time being. Support is the 18 day moving average at 60.82 and just below there at the 45 day moving average around 60. Resistance is the coming from previous swing highs around 62. Further resistance waits above around 62.54, where the 100 day MA and the Bollinger band is. Stochastic is on the rise and MACD has put in a short term bullish cross. RSI shows a moderate reading of 57 and has room to run before indicating over-bought.

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The wider view shows that we are approaching the upper boundary of a trading range established between57 and 62. If resistance at 62 is breached, then price will be back into another trading range between 62 and 68. A number of intermediate resistance levels exist up through 65. The future of this chart rests on the notion that economies all around the globe are in recession and the US is following that path as well. The idea is that further monetary stimulus is coming and is effectively already in the pipeline. As long as the USD based international monetary and financial system maintains integrity, price will only go as more base money is injected (QE). However, a confidence event that shakes foundations and brings integrity into question may produce a chart that shows collapsing price. As long as the trend is up and to the right, Freegold is still coming. When the chart trend goes rapidly and aggressively the other way, sufficient to violate the longest term trends, Freegold will likely be at hand.

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As a reminder: I now believe that GTU offers the safest approach and will offer the best chance that the gold in the fund will actually stay in the fund through the onset of Freegold. It is not near as liquid as PHYS because it trades on far less volume, but it also does not offer a mechanism that a well funded individual could use to trade shares in for actual bullion.

The long term daily chart shows price right at the boundary of the descending triangle. A breach of the boundary suggests the intermediate trend is changing. 68 is going to be tough resistance.

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The weekly chart shows price finding support at the long term support level, the 100 week moving average. This moving average ultimately provided support during the 2008 crash of the financial markets. Resistance is the 18 week at 62.50. The Bollinger bands are narrowing rapidly and indicate that volatility will likely be increasing in the near future.

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The monthly chart shows price right at the long term support level provided by the 18 month moving average.  This level has held through out the bull market in gold and since jst after the inception of the fund. RSI is bouncing off support and stochastic is just now reaching over-sold levels. Short of a massive drop in liquidity that fans fears of massive deflation, the bottom looks to be in for gold and GTU.

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