Gold Price

The gold price is in weak seasonal mode, so not to make that much
of it. If the price still looks sickish by Jul / Aug, best sit up and take
note.

Gold traded very nicely against my macroeconomic directional
indicator from 1999 until Aug. 2008, when the indicator tanked on
collapses of oil and industrial commodities prices. This development
created a decisive break in the long term trend of the macro indicator.
Gold weakened too, but no major long term trend lines were broken.

The macro indicator went into recovery in late 2008 as oil and
industrial commodites stabilized and then turned up. The last time
the macro indicator was at its current level was late 2007, when gold
traded at $800 -850 oz., so the discrepancy in relative behavoir is
not so large.

My economic value estimates have gold in a range of $500 - 600. and
the main long term chart trend at $650 - 750. Gold went to a large
premium to all these measures starting at the outset of 2006 and has
maintained a premium ever since.

By my long term estimates, silver, oil, most industrial commodities and
natural gas are all dirt cheap relative to gold and my preference would
be to play rallies in these markets rather than futz with an item that has
as much as 40% price downside.

I have attached a chart for the GLD etf. When you pull it up, you'll see
a double top and a shorter term downtrend. A price of 85 is an
important pivot point and a break below 85 could get you 75. Ok, but
a more interesting time may come when gold approaches a stronger
seasonal interval as summer kicks off. Chart.