Saturday, January 05, 2008

Gold And Gold Stocks Update



As you know I've been bullish on gold and gold stocks. So far the trade is working out amazingly well. I know a few of you are also long gold with me so I'd like to talk about upside profit targets.

Above is a chart of GLD. As you can see gold had a very nice accelerated move to the upside. If you look at points A and B you will notice the distance is about 7 dollars. If you add 7 dollars to the breakout point (C), you will get an upside target of about 87 to 88. On the next move up (if there is one) I will take profits if GLD trades into the 87 to 88 price zone.

Below is a chart of XAU (green price bars) along with a leading proprietary indicator that I use which is the white line. I actually posted the chart below back on December 6th and I was forecasting a rally. You can visit the link by clicking here.

Since then the forecast has worked out well and this leading indicator seems to be doing a good job at leading gold and gold stocks.

If you look at the chart below, you can see that the white line tops out in the next few weeks and begins trending lower. According to this chart, this means gold will rally for another week or so and then begin a move down. This is why I will exit my long gold trade on the next move up if we get one. As always my friends, we will see what happens.

8 comments:

BXhype said...

Kevin-
where do you place a stop in the case that GLD does reach the upside target you're looking for?

Kevin said...

Right below the gap...around 82.75

Bullish Jim said...

Great analysis as always, Kevin. In your experience, how correlated are the returns on gold to shorting the dollar?

Also, I'm intrigued by the symmetrical triangle patterns you've been showing. If you have a second, would you mind looking at EDU to see if the chart qualifies?

All the best-

Jim

Mike said...

Hi. Are you talking about a trade for a short term pullback ? I know gold usually peaks in April. What about GDX ?

kk said...

Kevin,

DBA explodin with extremly heavy volumn. What do you think? Thx!

Johnabi said...

Hi Kevin,
Thanks for the work you do and the desire to share with us. I have been reading for a long time now. I remember that you "moved" something forward in time. (50 days, 3 months?) This then was used as an indicator for the direction of gold. What reminded me of this is your lastest gold chart. Are you still using that as an indictor and if so is it still of worth to you?
Keep up the good work, Johnabi

Kevin said...

OK...I will try to answer everyone's comments.

Hi Bullish Jim,
I can't give you an accurate answer regarding the returns on gold versus the dollar. I'd have to research it.
EDU looks more like an ascending triangle not a symmetrcial triangle. The buy point would be if EDU trades above the December high.

Hi Mike,

Not sure what to expect in gold after January.. It could be a pullback or a significant move down.. As the days unfold I'll update the chart and post my comments here but I do know I will be out of my long position in the next week or so.

Hi KK,

DBA looks great but I don't see any low risk trades right here to buy, but I'll tell you one thing, do not short it!

Hi Johnabi,

The chart you are refering to is the chart I posted yesterday. Notice how the indicator leads by 3months..

IRSHELP said...

Kevin,
re your chart of XAU, with your leading indicator overlayed. Noticed you are using stockcharts.com. How did you get your proprietary indicator to plot on xau, via stockcharts.com?

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