About Me

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 !!!

Wednesday, March 28, 2012

Gold Price Observations

The cyclical uptrend in the gold price off the late 2008 cyclical low of $720 oz. remains intact.
The breakdown line for the trend is now around $1620 - 30. Gold, today at $1658. is still above

The 10 wk. RSI is getting a little droopy under 50. The chart link shows the Gold Bugz have often
come in to buy the metal when the 10 wk RSI is around 50, and, if you check the ADX chart in the
bottom panel, you'll see the Bugz have been ready to jump in at +DI 20 in recent years. $GOLD

The intermediate term MACD does show a downtrend underway off last year's high, but further
weakness in price will be needed to re-affirm it.

The chart also shows the gold price pivoting off the $1560 oz. level over the past 12 months.
Since the price has been unable to move back above its 40 wk m/a in recent weeks, a move
down to the pivot to test support cannot be ruled out.

My fundamental indicators, which imply price direction but not price level, have been flat
since mid-year, reflecting a steady Fed Bank Credit account, a volatile but firmer US$, and a
weaker level of sensitive materials prices.

I also watch the price of gold relative to that of oil carefully. At 15.8 barrels to the ounce, it
is well below peak levels but is still elevated on a longer term basis.

My financial armageddon angst meter has gold running with a 44% premium. That implies
plenty of downside, if, God forbid, the global financial / economic environment should settle
down for a year or two. My all in mining cost + sensible commercial mark up measure has gold
as tragically overpriced, still.

With China and India big money printers and gold buyers, I am toying around with ways to
make handicapping the gold price less US$ centric. Keep you posted.

No comments: