Gold, some comments

All I see about gold...going back a few days... was how $1200 was just s launching pad and it is going higher. Very few were looking at the real picture though, the technical side of the equation.

No matter how you cut it gold was overbought...which just means that it is on the topside of it's trend channel. I pulled up chart after chart for gold indices, gold companies and they all look identical.

Keep in mind that I was not really watching gold anymore so the only real reason I did not see the drop was I was not looking for it.

Here is a chart...CBOE gold index, not the price of gold. Why anyone would have expected it to go any higher after the latest run-up is beyond me.


The 80 and 40 day linear regressions and the trendline are indicating the same thing....there is no break in the trend yet, just a typical linear regression. There is still approximately 4% of the peak price in room left before the price is at risk of breaking the trend and actually heading down. The current trend has been in place since the end of 2008 and each of the minor corrections back to near the trend line have all been normal.

While it might be a good day to buy gold I'm not jumping in. Other fish to fry right now.

I find it odd to talk about charts as if the technical stuff actually determines what is going to happen next. Can it predict the next move? Not really, but it gives a trader something to work with as a starting point. Seeing as trends are repetitive it certainly can indicate a high probability next move...as long as it is not this late in the game in a trend.

Jeff.