It’s make or break time for gold (GLD) and gold stocks (GDX).  We mentioned last week that we weren’t very optimistic for precious metals based on the extended down trend, the break of medium term up trend lines, and the consolidation of GDX below a longer term down trend line.  GLD has held up better, but it now appears that it is resuming its downtrend.  We mentioned that if $160 was broken then $150 would most likely be back in play.  Well, $160 broke yesterday and today we got a close below it again.  Meanwhile GDX in in the $41 area visiting the lows from last July.  This just isn’t a good situation for precious metals shares.  If GLD revisits $150 then GDX will almost certainly break below $39 in a very sharp and very ugly way.   There are a few positives. GLD is still above the up trend line from last May’s lows.  Smoothed Twitter sentiment for GLD has a small positive divergence with price (even though the

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Gold (GLD) is currently being compressed in a triangle between two intermediate term trend lines.  One is upward sloping from May and the other has a downward slope that began in October.  The apex of the triangle will be reached within a few months so it won’t be long until we finally get a longer term direction for precious metals.   During late August and early September of 2012 both GLD and precious metals shares (GDX) broke above a downward sloping trend line that began in late 2011.  The fact that GLD and GDX  have both held above those trend lines to the point where they have been eclipsed by new intermediate term uptrend lines (which started in May) bode well for a break to the upside. Although GLD has only corrected by 13% while GDX has corrected by 20% from the October highs, both of them have retraced approximately 60% of the rally out of the May lows.  This is about the maximum retracement that most securities make if

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The price action for gold stocks (GDX) last week has been very disappointing.  Especially since gold (GLD) has held up and traded as we expected it should.  The chart for GLD looks like it is simply consolidating the strong move up that started in early August. It has held the horizontal line near 164 that has acted as both support and resistance over the past  fifteen months.  It rallied over the past week to break out of a steep short term down trend line which bodes well for precious metals. The chart for GDX is more troubling, but still has plenty of room for a bullish resolution (although with a serious amount of pain for the bulls).  Our largest concern is that it couldn’t hold the 50 level.  Once that level broke, price accelerated to the down side on heavy volume.  We suspect that traders who bought the breakout above the down sloping trend line and the June peaks dumped the stock rather than take a large loss.  If this

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Two weeks ago we posted that we believed that gold and gold stocks were consolidating. We now believe that the consolidation is almost over and precious metals are ready to move higher.  Both GLD and GDX have met our consolidation targets of about 50% and 33% of their respective rallies out of the May lows. The fact that GDX is holding up relatively better than GLD is a very good sign for precious metals going forward.  In addition, GLD has fallen hard enough to shake out some weak hands and is now back to its downtrend line.  A break above that line should be a good low risk point to go long both gold and gold stocks.   Our Twitter Sentiment indicator for GDX is also showing positive signs for precious metals.  Twitter sentiment is diverging from price on a daily basis a fewer traders make negative tweets on each further drop in price.  The large drop in price last Friday didn’t generate as much negative sentiment as the smaller

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Over the past several months gold (GLD) and gold stocks (GDX, GDXJ) have given a few low risk opportunities for you to accumulate precious metals.  We posted in late July that although there was still risk to the down side in precious metals we would be buyers if we held absolutely no gold in our portfolio.  Then in early September we mentioned that GLD and GDX had broken their respective down trend lines.  Once the trend lines held we felt there was a low risk entry being offered by precious metals. Today we’re back to the low risk entry points with gold stocks acting well.  After the breakout GDX ran strongly until GLD hit resistance in the 174 area.  This point marked the last two previous peaks in GLD.  These peaks were made while GDX was diverging and continuing on its downward slope.  GLD has given up 40% of the rally out of the May lows, while GDX has only given up 25% of it’s rally. It wouldn’t be unreasonable

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