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Gold ETF The Gold ETF Experience
GLD Gold ETF - Taking
advantage of the gold market using the GLD exchange traded fund to generate
consistent profits in any market condition.
As I mentioned before, the past 5 months have been very frustrating for most
traders as we are stuck in this sideways price action. I also noted that August
to December is generally the stronger months for gold. Although gold has been
under selling pressure during the last 4 weeks I think there is light at the end
of the tunnel. Its usually the darkest before dawn, but there are some hurtles
for gold to over come before we are in the clear which I explain below.
Chart 1 The Gold Mining Stocks Index
This is a 10 year chart with a cup and handle pattern complete with a breakout.
As you can see in the chart below gold mining stocks have continued to collapse
below their support level. This does not mean gold is going to follow but it is
a red flag which needs to be noted for future long entry points. Gold mining
stocks in general are seen as volatile and high risk types of investments so I
understand why investors are unloading their positions to lock in profits.
Gold mining stocks are pushed below long term support level.
Chart 2 Gold Stocks Index
This is an 8yr chart of the price action of gold stocks and you can see that
they are currently testing long term support levels. If this monthly bar closes
below this trend line then long term investors should be sitting in cash until
we have a new opportunity to enter long or short. The HUI generally makes the
move before the price of gold so I follow the HUI in all time frames.
The HUI is testing long term support.
Chart 3 Performance Chart (Gold Stocks vs Price of Gold)
The past 2 years from 2006 to present gold stocks have slowly been
underperforming the price of gold. This is generally not a good thing to see if
we want higher prices for gold. But the good news is that gold stocks appear to
be reaching levels at which new rallies have started.
Gold stocks under performing the price of gold but near support.
Chart 4 Daily HUI Chart
I follow the HUI like a hawk as it fine tunes my entry and exit point for
trading GLD, DGP and DZZ funds. Last month the HUI made a lower high and a lower
low which is a red flag. While I dont predict prices I am thinking these lower
prices for gold stocks are just panic sellers over extending a sell off. I would
really like to see an August rally kick into place.
The HUI makes a lower
high and lower low on the daily chart.
Chart 5 GLD Gold ETF Chart
While gold stocks have been selling down, gold has so far been able to hold some
ground. As you can see in the chart below the last three months gold has made
higher highs, and higher lows. Currently gold is testing Major Support at the
Gold ETF GLD at long term support still holding its ground.
My analysis of gold using the charts provided above shows that gold stocks and
indexes are oversold and are at major support levels. Thus an August rally is
not out of the picture and we could have some favorable setups in the near
future. I would prefer higher prices, but in the end movement is movement and we
can profit in either direction evenly.
GLD gold etf trading for
me is the most accurate trading vehicle I have come across. I have been using my
proven trading model which avoids the price gaps and keeps risk under 3% for
each trade. GLD makes it simple to profit from the markets using a proven
trading model for trading long and short term gold setups in all market
conditions (bull, bear, and sideways).
My focus for short term
trading is simple. Wait for a breakout which satisfies my trading model, enter
the trade and then exit 50% of position on the first sign of weakness. Exit
second half on a trend line break. My goal for GLD ETF is 2-5% and we are in
trades for 2-10 days unless prices continue to run. I generally have 10-20
trades per year with gold.
Vermeulen is Founder of the popular trading site
There he shares his highly successful, low-risk trading method. For 6 years
Chris has been a leader in teaching others to skillfully trade in gold, oil, and
silver in both bull and bear markets. Subscribers to his service depend on
Chris' uniquely consistent investment opportunities that carry exceptionally low
risk and high return. Reach Chris at: Chris [at] theGoldAndOilGuy [dot] com
This article is
intended solely for information purposes. The opinions are those of the author
only. Please conduct further research and consult your financial advisor before
making any investment/trading decision. No responsibility can be accepted for
losses that may result as a consequence of trading on the basis of this