TDEN

Posts Tagged ‘Gold’

Here is a 2 year chart of GDX the etf that tracks gold mining stocks. You will notice that it is almost identical to that of SLV as described in the post below. Since the March top of 2008 GDX has been trading in right triangle and rectangular patterns. It has broken through the hypotenuse of the major right triangle price formation and is in an intermediary uptrend channel. Volume has increased substantially on this ETF and momentum is turning positive on the macd at a high level. It looks like GDX is about to break out of its trend channel and eventually move to new highs. The projected price target of $73. is computed by subtracting $16.33 (the Oct. 2008 low) from the price that is equal to the shortest distance to the hypotenuse and then adding the result to that price. I have marked that distance with a line. That calculates to $45.00 – $16.33 = $28.67. $45.00 + $28.67 = $73.67. If this price calculation works out that equates to approximately a 50% return on GDX from it’s current price of $48.29. It took about 1.5 years for this chart pattern to form. I anticipate the move up to be significantly quicker.

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GDX has corrected to its 200 day moving average which coincides with its uptrend line. The current price of 35.74 looks like a good buy. The initial short term target of this trade is about $47.00 but longer term it should trade much higher as gold keeps moving up in price.

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It looks like the bull market in gold is just getting started. The 50 day ma crossed upward over the 200 day ma signaling a bull market. Buy GLD. Leaps going out to Jan 2011 are available but premiums are high due to the volatility in gold so invest accordingly. Another possibility would be to buy DGP a gold double long etf. GLD is currently trading for around $90. per share.

UPDATE 6/5/09: GLD has formed 2 extremely bullish chart patterns. It has formed a massive inverse head and shoulders pattern that spans from March, 2008 until now and it has formed a cup and handle that spans from Feb, 2009 until now. It looks like gold is getting ready to bust through the $1,000. per ounce mark. The projected price target in the next leg up for GLD is $130. per share. Now is the time to add to your positions.

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