As A Corollary To A Higher Dollar....GLD, GDX, SLV

By: Guy Lerner | Wed, Jan 20, 2010
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As a corollary to a higher Dollar, it is my expectation that precious metals will be under pressure.

For example, I have had a sell signal on the SPDR Gold Trust (symbol: GLD) since January 11, 2010. Gold still remains in a secular bull market, but on the weekly time frame that I function on, technical studies suggest an opportunity to buy at lower prices. GLD should test the $104 to $105 area, which are the lows of the negative divergence bar on the monthly chart.

If gold will be weak, then the Market Vectors Gold Miners ETF (symbol: GDX) will be under pressure as well. See figure 1 a weekly chart of GDX. The head and shoulders top is identified and this week's price action is breaking below the neck line of this price pattern. In the context of a higher Dollar, I would expect lower prices from this volatile issue.

Figure 1. GDX/ weekly

The i-Shares Silver Trust (symbol: SLV) looks "less" bad than GLD or GDX, but with a higher Dollar, there will be downside pressure. See figure 2 a weekly chart of SLV. The cluster of negative divergence bars implies a trading range. Support is at $17.

Figure 2. SLV/ weekly



Guy Lerner

Author: Guy Lerner

Guy M. Lerner

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