Another look at Gold

One of my picks from my New Year's post, Two-thousand and nine predictions, was Gold. As we near the end of the first month of 2009, let's take another look at Gold.


Here is a Weekly Triangle chart on Gold. As you can see, the Buy Triangle from November of last year was reversed on the January 12th Sell Triangle. That short-lived Sell was just this week reversed to a Buy with a brand new Buy Triangle. If you haven't figured it out by now, a Triangle that results in a loss is often followed by a very profitable Triangle as the major trend is re-asserting itself. That appears to be what is happening in Gold.

Gold Weekly

The Daily Gold Triangles have been very effective in navigating in and out of Gold on a very short term basis:

Gold Daily

Adding to the bullishness of the Daily and Weekly Triangle Buys is a break-out of GLD, the Gold ETF, out of an almost one year long down channel. Notice how GLD breaking out of the down channel is accompanied by a break above its 50 week moving average and confirming bullishness in the MACD and RSI indicators:

GLD Weekly

Although I like to play individual Gold Mining stocks because of their inherent leverage to the price of Gold, probably the safest bet in an intermediate to longer term move in Gold is the double beta gold etf, DGP:

DGP Weekly

The above chart shows a nice break out above a one year down channel and suggests that there isn't much resistance until the mid-20's. Below, the Weekly Triangle chart confirms an Intermediate Term Buy Signal:

DGP Weekly Triangles

In summary, from a bullish set-up at the top of the year, Gold faltered a bit, mid-month, but has come roaring back with contemporaneous Buy signals from independent charting techniques. Thus, Gold is telling us to take notice of this chart strength and to disregard (for now) the blip lower earlier in the month.

DGP will effectively capture about twice the percentage move up that is being signaled by these Buy signals and may very well be the best core position for playing the upside.

My favorite speculative gold play is Capital Gold:

CGLD 90 minute chart

Not shown on the chart are Wave 5 projections between $0.90 and $1.00, almost a double from current prices. Click on the link above ("Capital Gold") to go to their web site and examine the fundamentals, which appear to be outstanding and certainly much improved since this stock sold for $2.00 a share in 1999. If gold is on any kind of sustained run here, CGLD has the potential to be a multiple bagger.


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