Back on 6/27, with gold at $1256 oz., I posted that the metal was
riskier in price on several measures, including the fact that my gold
macro-directional indicator had diverged negatively from the price of
gold. I mentioned $60 oz. of near term price risk. Well, we closed the
day at $1183. A considerable portion of the overbought has been
removed, but, as the linked -to chart below shows, we have two
month downtrends on RSI and MACD, and a wave theorist might
argue that gold has completed a five wave up move with a recent
top that was fatigued on a momentum basis.
The fun element here is that since gold began its latest uptrend in late
2008, the bugs have come in to buy all of the dips between 30 -40
on RSI. RSI on today's close is 40, so it will be interesting to see if
the bugs are set to launch a rescue effort and rally the stuff. A
significant break of trend, and gold is close to it, could be on the
nasty side if the gold buffs sit this one out.
- Peter Richardson
- Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!