gold bugs Archives - the patient investor

September 22, 2011

Gold finds safe haven support

Softening of gold prices from the “stronger” dollar is being offset by demand for gold as a safe haven from the looming euro-zone crisis. Respect of support at 1750 would indicate another test of $1900; confirmed if spot recovers above $1830. The pattern remains bullish at present, but breakout below $1750 would warn of a double top and correction to $1500/$1600* (depending on whether you take the base as $1700 or $1750).

Spot Gold

* Target calculation: 1900 + (1900 – 1750 ) = 2050 and 1750 – (1900 – 1750 ) = 1600

Gold miners such as AMEX Gold Bugs Index ($HUI) continue to test support after their recent breakout. Failure of support at 600 would warn of a bull trap and weaker spot prices.

Amex Gold Bugs Index

* Target calculation: 600 + ( 600 – 500 ) = 700

September 13, 2011

Gold Miners test support

Amex Gold Bugs Index broke through long-term resistance at 600 last week and is now retracing to test the new support level. Respect of 600 would confirm a primary advance to 700* — a bullish sign for spot gold prices.

Amex Gold Bugs Index

* Target calculation: 600 + ( 600 – 500 ) = 700

September 8, 2011

Gold finds support at $1800/ounce

Spot gold found short-term support at $1800/ounce. A rally to $1900 from this point would form a bullish ascending triangle, suggesting an upward breakout and offering a target of $2100*. Failure of support, however, would penetrate the rising (secondary) trendline and suggest a correction to $1500.

Spot Gold

* Target calculation: 1900 + ( 1900 – 1700 ) = 2100

Gold Bugs ($HUI) and Gold Miners ($GDX) Indexes both broke through resistance to signal a fresh primary advance. With a target of 700 for $HUI, the breakout favors continuation of the current advance in spot prices.

Amex Gold Bugs Index $HUI

* Target calculation: 600 + ( 600 – 500 ) = 700

September 1, 2011

Gold miners threaten breakout

The Gold Bugs Index, representing unhedged gold miners, threatens to break through resistance at 600 which would signal an advance to 700*. Upward breakout would negate the earlier bear signal from penetration of the rising trendline — as well as strengthening prospects of a further advance in the spot price.

Gold Bugs Index

* Target calculation: 600 + ( 600 – 500 ) = 700

Spot gold has so far respected the secondary trendline and support at $1750. Short retracement from resistance at $1850 would be a bullish sign, suggesting an upward breakout. Recovery above $1900 would test $2000, though the calculated target is even higher*.

Spot Gold

* Target calculation: 1900 + ( 1900 – 1750 ) = 2050

Upside potential for gold remains strong. Treasury and the Fed are running out of options to revive the economy and further quantitative easing grows ever more inviting despite the inflationary outcome. With presidential elections looming in 2012, the White House will also be doing their best to influence the Fed decision.