Gold $1,236 – A Pause That Refreshes is Welcomed

Please don’t confuse a desire for some consolidation and new base-building with anything more than it is. Yes, it would be great to continue a straight up move but the history of this “mother” of all secular bull markets has been two steps up and one step back. This pattern has killed the perma-bears and bulls turned bears hoping to buy back in at significant lower levels.

Gold has often traded in some nicely defined channels and if it does it again, we can see a pullback here to as low as $1,185 and mean absolutely nothing to the bigger picture. I continue to believe my 2010 target of $1,300 to $1,500 is very doable. Besides, I love watching Tokyo Rose wiping off the blood and saying for the umpteenth time – “gold is not in a bull market and this pullback is the beginning of the end.”  What an indicator!

plus:

Quick Update

Stepping out for the evening but an update on some news of the day was needed.

First, the U.S. stock market appears to have weathered yet another storm and my bear suit remains in the closet (but is still available for immediate use). Gold is in need of a consolidation and even a 3-5% correction. Whether it does or doesn’t, my target for 2010 remains $1,300 to $1,500.

….read much more HERE

Are Precious Metals and Indexes Going Parabolic?

It’s been an exciting couple weeks in the market with gold now making new all time highs as money floods into this shiny safe haven. It has everyone all worked up wanting to take part or they are riding the rally up already. But the big question is when should some money be taken off the table to lock in gains and lower your overall risk during these crazy times?

Below are a few charts showing you how I see things at this time.

GLD – Gold Exchange Traded Fund
The price of GLD and gold appear to be going parabolic (straight up). The tough part about this type of price action is that large moves can happen in a very short period of time. But on the flip side, when the price reverses we tend to see prices fall just as fast if not faster. Trading this type of price action carries a very high level of risk. Those chasing it up buying at these overbought market conditions is a double edge knife.

SLV – Silver Exchange Traded Fund
Silver is trading similar to gold but the key difference here is that silver has not broken to a new high as of yet. The high was set in 2008 just over $20 per ounce. But from looking at the chart I think metals are ready for a breather.

HUI Index – Gold Stocks
Gold stocks have yet to breakout along with silver as they both are nearing key resistance levels. With gold stocks and silver trading near resistance I figure we will see pause in the coming days as traders digest the recent strong moves up taking some money off the table incase prices get stuck under these resistance level.

SPY – SP500 Broad Market Exchange Traded Fund
The broad market appears to be forming a possible short setup on the daily chart as the price continues to drift higher with declining volume. Also indexes are testing key resistance levels and the 10 period moving average. The next few days should be interesting…

Mid-Week Precious Metals and Index Exchange Traded Fund Report:
In short, it looks like precious metals and the broad market could take a breather in the coming days. I’m not sure how large of a correction we will see but I do not think it will be all that big.

Gold and silver should have a quick dip with buyers stepping back in on weakness. The SP500/broad market is a little more tough to call as last weeks market crash messed things up washing out all the stops in one day instead of weeks… but we could easily see a 5% drop in the market still.

Anyways I hope this analysis helps everyone…

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Chris Vermeulen