Saturday, July 20, 2013

All That Glitters Indicators Tracking Gold Higher But.....

The price of gold has been rising in recent sessions as selling pressure has abated and the traded weighted value of the dollar has backed off. This, along with other factors including the time and higher prices in the gold miners, have led to all back the longest dated timing model to turn away from strong buy region. The one-year model came off the -2 demarcation and is sitting at or around -1.8. Additionally, the 6-month calculation is -1.3, some 0.7 points off from just one month ago.

1-year model, -1.8

6-month model, -1.3

That said, the two year model remains in the strong buy region at -2.4
2-year model

More importantly, the risk measure I began employing in recent weeks is still weighted towards the higher prices in gold and precious metal shares. As I stated in a previous column, the slope of the 6-month indicator can be used as a measure of risk control with positive slopes additive to the buy indicator performance and negative slopes in conjunction of negative timing model indicators helping produce better short results. Presently, the 6-month model slope is positive.