Honest Money Gold and Silver Report: Market Wrap Week Ending 6/18/10
Market Wrap
Week Ending 6/18/10
Gold
Gold closed at a new all-time high: $1256.60 (continuous contract). GLD made a new high of 122.83 for a weekly gain of 2.35%. The daily chart below shows GLD breaking above resistance from its May - June highs and forging ahead for another all-time high. Gold's performance has been nothing short of spectacular.
Notice on the chart that both RSI and MACD are showing negative divergences. These indicators warrant attention, as they will be resolved one way or the other: either price will continue up, forcing them up; or price will drop and align with the divergences.
As mentioned in the email alert earlier this week - price trumps all else. Indicators are derived from price, so they are secondary at best. Indicators often give false signals or are reversed, etc.
There is no perfect system or one that is even close. It is a game of percentages: you lay your money down and you take your chances. You try to control risk versus reward.
Hence, divergences are something to be monitored. They say: pay attention, something MAY be up. But in the end, all that matters is price; and if you are on the right side of the trade. Everything else is secondary.
With that being said, weighing risk versus reward: buying or taking new positions at these prices, with the current divergences, is risky business, and better set-ups will prevail.
The gold bull has a long way to go. Buying on weakness and selling into strength is a hard act to beat.
Gold's (GLD) weekly chart shows pretty much the same thing as its daily chart: a break out above resistance to new highs has occurred, but negative divergences can be seen in RSI and MACD.
Also, notice that volume declined significantly on this break out, compared to the previous moves to new highs. These divergences suggest that there is less conviction and underlying strength to this move; however, a new high is a new high. The divergences warrant attention to the additional risks indicated.
Gold Stocks
The gold stocks were stellar performers this past week, with the GDX gaining 6.44%. Some of the individual miners featured on the stock watch list for the past several months performed even better: Newmont (NEM) was up 8.89% and Randgold (GOLD) was up over 7%, while Silver Wheaton (SLW) gained 8.25%.
The daily GDX chart shows two gaps up on Thursday and Friday. Overhead resistance is directly above from the May high. Gold stocks have been performing well, but they haven't been able to match physical gold's all-time high as of yet. Open gaps usually get filled.
The above excerpt is from this week's 30 page report, available on the Honest Money Gold & Silver Report website. All major markets are covered: stocks, bonds, currencies, and commodities, with the emphasis on the precious metals.
Dozens of charts are available and our stock watch list provides numerous investment ideas each week, while our model portfolio offers a game plan to implement them. A FREE one-month trial subscription is available. Stop by and check it out.
Good Luck. Good Trading. Good Health. And that's a Wrap.
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Author: Douglas V. Gnazzo
Douglas V. Gnazzo
Honest Money Gold & Silver Report
Douglas V. Gnazzo is the retired CEO of New England Renovation LLC, a historical restoration contractor that specialized in the restoration of older buildings and vintage historic landmarks. Mr. Gnazzo writes for numerous websites, and his work appears both here and abroad. Just recently, he was honored by being chosen as a Foundation Scholar for the Foundation of Monetary Education (FAME).
Disclaimer: The contents of this article represent the opinions of Douglas V. Gnazzo. Nothing contained herein is intended as investment advice or recommendations for specific investment decisions, and you should not rely on it as such. Douglas V. Gnazzo is not a registered investment advisor. Information and analysis above are derived from sources and using methods believed to be reliable, but Douglas. V. Gnazzo cannot accept responsibility for any trading losses you may incur as a result of your reliance on this analysis and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions. This article may contain information that is confidential and/or protected by law. The purpose of this article is intended to be used as an educational discussion of the issues involved. Douglas V. Gnazzo is not a lawyer or a legal scholar. Information and analysis derived from the quoted sources are believed to be reliable and are offered in good faith. Only a highly trained and certified and registered legal professional should be regarded as an authority on the issues involved; and all those seeking such an authoritative opinion should do their own due diligence and seek out the advice of a legal professional. Lastly, Douglas V. Gnazzo believes that The United States of America is the greatest country on Earth, but that it can yet become greater. This article is written to help facilitate that greater becoming. God Bless America.
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