Wednesday, November 10, 2010

An Update On Gold’s Rising Wedge Pattern

We wrote on here not too long ago that we expected a major price move downward in gold.  Well, what we got was a mildly large move up.   Mildly large comparative to our anticipated correction size but still substantial.

All of this has given gold bulls the courage of almost unreal histrionics with their projections of a dollar going to zero, hyperinflation and all of their other standard  remarks. 

Lets take a look at the monthly chart of the gold ETF.  What we have is a massive gap upward in an attempt to break out of this pattern.   There are many traders (most good ones), who believe all gaps are eventually filled.  Always.  In other words, this almost surreal “hanging chad” could easily be a false move that has convinced the entire world of its legitimacy.  That gold made this move at the same time most relatively illiquid aka easily manipulated commodities are exhibiting typical blow off patterns should be very raise serious concerns about the sustainability of this move.

The fact that the gold ETF trades such enormous volume that it turns its entire share base every handful of days shows how massive the financial and hedge fund speculation is in gold.    But hey, it’s a hedge against Wall Street and financial shenanigans.  Or so we are told. 

As we said before, the gold market was bailed out by the Federal Reserve after being slaughtered back in 2008.  Don’t expect that to happen in any future crises.  My call for a major correction in gold over coming months still stands.

 

  

2010-11-10_0825

posted by TimingLogic at 9:24 AM

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