On January 24, 2009, I put up a post saying "Here comes the gold." On the following Monday, a spike in GLD (the gold ETF) price occurred and indicated there was increased new interest in gold from the sideline (click on the chart on the left for a larger image). Those that got in at the low 80s level were waiting for this golden moment to take some profits. As the price retreated back to the breakout level, those that missed getting on board saw it as a second chance for them to get in. Now gold has caught the attention of many in the financial press, more sideline money will be coming in to help push it above the $1000 level, and the ETF GLD will likely break the July, 2008 resistance level.
While gold was up more than $20 last Friday, the gold mining stocks retreated from their opening high and ended the session by giving up some of the recent gains. This warrant some careful monitoring to make sure the divergence between the gold mining stocks and the precious metal itself does not continue for too long.
It can be that people are just more incline to own the actual gold than the gold mining companies. If this turn out to be the case, then the run for the hill on gold will be very sharp and quick. From the ABX chart, one can see how the price retreated on Friday from its opening high (big solid weak candle).For those that are interested in gold mining stocks, an alternative to picking gold mining companies is to play the ETF GDX. This is an ETF that track a group of mining companies.
I hope you will have your golden moment from the bull move on gold. Trade well, trade profitably, and don't get greedy.
