Gold Miners Index May Be Warning Us…
The past couple weeks I have been keeping a close eye the price of gold and the gold miners index. I check to see if its pointing to higher or lower prices in the near future using inter-market analysis, price and volume, along with technical analysis. At this time the charts are still pointing to lower prices in the coming days or weeks. Words: 530
So says Chris Vermeulen (www.thegoldandoilguy.com) in an article* which Lorimer Wilson, editor of www.munKNEE.com, has reformatted and edited […] below for the sake of clarity and brevity to ensure a fast and easy read. (Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.) Vermeulen goes on to say:
The Gold Chart
Taking a look at the [following] daily chart of Gold you can see it has formed a bear flag with declining volume and the price has drifted up into a resistance level. This combination typically leads to lower prices.
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With international fears floating around and the fact that inflation has started does make me a little weary of shorting gold but one thing I have learned over the years is that trading on fundamentals and news clips seen on TV is not a reason to pass on a setup if one forms in the coming days. The only thing that pays in the stock market is when the price action goes in your favor. This is why I focus on price, volume and momentum while avoiding what others are saying elsewhere. Trading is a numbers game and I put my money on the table when the odds are clearly favoring one direction. Unfortunately, I am [often] trading trades against what the masses think and feel is the right thing to do.
The Gold Miners Stock Chart
The stocks [in the GDX chart below] are forming much the same pattern as gold bullion but… has actually put in a possible reversal candle [last Wednesday and,] if this is correct, then we should see gold, and most likely silver, follow suit… by moving lower and possibly even start a correction.
Conclusion[G]old stocks [have] sold off… while both gold and silver [have] closed only slightly lower [and] when this happens near a resistance zone, with a bearish price and volume patterns, I start to look for a shorting opportunity. It has yet to happen and I’m not going to jump the gun, but I am waiting for the right opportunity to take advantage of these trading instruments.
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- The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.
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