Now, after weeks of almost no change, we are starting to see some interesting developments in the gold and precious metal (metal and stocks) investment complex. First, the yellow metal really took it on the chin in last Friday's trading, falling nearly 2%, performance of which is reflected in the price chart of the Gold Trust Spider ETF (ticker GLD) shown below.
The first thing that stood out to me was that not only did the GLD break the support line that it has been holding for a few weeks, but that it did it on volume. The GLD turn over of 23.3 million shares was one of the highest volume rates in the last year. Gold prices are starting to reflect not only the weakness telegraphed in the gold stock indexes, but also the growing pessimism from investors and the media. Friday's decline also puts my price targets on gold and the GLD into play now.
Interestingly enough, we are not getting similar volume characteristics on the gold stock indexes. In Friday's trading, the Market Vectors Gold Mining ETF (ticker GDX) traded down by more than 5% on nearly 22.9 million shares. Although elevated versus the average turnover, Friday's volume compares to price points in mid-May last year, specifically the heavy turnover days between May 15 and 17, where volume ranged from just over 24 million shares to 30+ million shares. The nearly 23 million shares clocked yesterday just is not enough.
How does this relate to the timing models? Well, a slight uptick in money supply in unison with the falling price of gold pushed timing models to within a stones throw away from a strong buy for gold/precious metal stocks on both the 1-year and 6-year models. The latest model results with historic results are shown below. Additional, I provide the latest timing model result for each time frame calculation and a comparison versus the prior week's results.
3-month model, -1.53 from -0.82
1- year model, -1.84 from -1.14
6-month model, -1.82 from -1.22
Now don't get me wrong, I am not ready to pull the trigger on gold stocks just yet. The timing models remain above a strong buy indication. Also, the price/volume characteristics in gold stocks on Friday, although positive in one sense, is still not a sign of strength. I am growing more optimistic that an entry point will show itself sooner rather than later. This is while the pessimism towards the group is building. I am still biding my time, but not the time seems closer versus just a few short weeks ago.
The first thing that stood out to me was that not only did the GLD break the support line that it has been holding for a few weeks, but that it did it on volume. The GLD turn over of 23.3 million shares was one of the highest volume rates in the last year. Gold prices are starting to reflect not only the weakness telegraphed in the gold stock indexes, but also the growing pessimism from investors and the media. Friday's decline also puts my price targets on gold and the GLD into play now.
Interestingly enough, we are not getting similar volume characteristics on the gold stock indexes. In Friday's trading, the Market Vectors Gold Mining ETF (ticker GDX) traded down by more than 5% on nearly 22.9 million shares. Although elevated versus the average turnover, Friday's volume compares to price points in mid-May last year, specifically the heavy turnover days between May 15 and 17, where volume ranged from just over 24 million shares to 30+ million shares. The nearly 23 million shares clocked yesterday just is not enough.
How does this relate to the timing models? Well, a slight uptick in money supply in unison with the falling price of gold pushed timing models to within a stones throw away from a strong buy for gold/precious metal stocks on both the 1-year and 6-year models. The latest model results with historic results are shown below. Additional, I provide the latest timing model result for each time frame calculation and a comparison versus the prior week's results.
3-month model, -1.53 from -0.82
1- year model, -1.84 from -1.14
6-month model, -1.82 from -1.22
Now don't get me wrong, I am not ready to pull the trigger on gold stocks just yet. The timing models remain above a strong buy indication. Also, the price/volume characteristics in gold stocks on Friday, although positive in one sense, is still not a sign of strength. I am growing more optimistic that an entry point will show itself sooner rather than later. This is while the pessimism towards the group is building. I am still biding my time, but not the time seems closer versus just a few short weeks ago.
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