Monday, April 26, 2010

What's Leading Gold



Above is a weekly chart of Palladium, Gold and a ratio of Palladium vs Gold. As you can see, Palladium has been much stronger than Gold since the beginning of 2009. If you take a look at the ratio line in the lower panel you will notice that this line has been rising which means Palladium has been outperforming gold.

The second strongest metal is Platinum which many times tends to follow Palladium's lead. Palladium is clearly the leader of the metals complex (Palladium, Platinum, Gold and Silver) which is why I decided to post the above chart. You'll notice that Palladium is now approaching major resistance from 2008. A push through this level may be just what gold needs to break out of it's sideways consolidation. A failure for Palladium to break through resistance may put pressure on the rest of the metals which is why I will be watching this resistance level very closely!

3 comments:

frank said...

Hope you had a stop on that TLT short.

Kevin said...

My entry to short never got hit.

Don's "Trading-In-Action (TIA)" said...

Well Frank, do you really have faith in the support at 90? If you take a look at it closely, it has been breached many times. A good support does not get pierced through again and again. Also, the more times a support is being visited, the more vulnerable it gets as the number of buyers who mop up the supply gets lesser and lesser. It is akin to chopping a tree down with an axe, aiming at the same spot and cutting it down with repeated blows. If a support level keeps getting attacked over and over again, in no time, it will also give way. Jus my thoughts...

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