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What's Going on with Gold?

Dec 12, 2011
Simon Maierhofer

The financial world is in shambles yet gold prices are falling. What's going on with the precious yellow safe haven? Here's the one chart that tells it all.

A picture is worth more than a thousand words. This will be a short article because the chart below explains exactly what’s going on with gold.

Today alone gold dropped $50 an ounce, the biggest one-day drop in months.

The chart shows an ominous wedge or triangle formation. The lower support lines goes back to January 2011. The upper resistance line started with the September 6 all-time high.

This trend line sliced through 1,760 on December 4. On that day the ETF Profit Strategy Newsletter pointed out that: “Gold prices are butting up against a trend line that originates from the September high. This is a low-risk opportunity simply because the risk is well defined (the trend line). Traders may go short gold with a stop-loss at 1,760 for gold futures or 171.1 for GLD (NYSEArca: GLD).”

Since December 4 gold prices have fallen nearly $100. Today gold found support at the lower trend line and a moving average that’s provided support for years (see ETF Profit Strategy Newsletter for details).

                  

What’s next for gold? Earlier this year in April, silver (NYSEArca: SLV) sliced away from its all-time high days before the major indexes a la S&P (SNP: ^GSPC), Dow (DJI: ^DJI) and Nasdaq (Nasdaq: ^IXIC) started to tumble. Silver now sliced away again. Will this usher in a repeat performance for stocks? Where’s important support for U.S. stocks?

The ETF Profit Strategy Newsletter monitors trend lines and other support/resistance levels for gold, silver, euro and the S&P. All major asset classes are at the cusp of breaking below major resistance. Yesterday’s special ETF Profit Strategy update includes an outlook for all major asset classes.

Gold-related ETFs: SPDR Gold Shares (NYSEArca: GLD), iShares Gold Trust (NYSEArca: IAU), Market Vectors Gold Miners (NYSEArca: GDX), UltraShort Gold ProShares (NYSEArca: GLL).

VIX Research:


 

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