Gold's Bigger Picture: Buy, Sell, or Hold?

 | Jul 12, 2017 | 3:57 PM EDT
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Over the past two years writing for Real Money I have weighed in a couple of times with my technical "two cents" on gold and select mining companies. It seems like a broken record at times but the long-term argument in favor of gold is that it is durable and has outlived many empires over the centuries including the Egyptians, the Greeks, the Romans and others. History has shown it is risky to trust paper currencies. Gold is still here as a store of value while the currencies of those civilizations are all gone.

Gold is a rare metal with jewelry and industrial uses and has served over thousands of years as a hedge. Over shorter periods of time the hedge may not work or work poorly.

Think about some of the countries that suffered severe currency devaluations over the last several decades -- Germany, Russia, Brazil, Argentina, Venezuela. Gold helped savers in those countries to conserve their savings. Stocks went up, too, but selection and timing then becomes more important.

Gold's price history is that it has strong upside moves for many years followed by long sleepy periods. The big rally in the 1970s with gold passing $800 for the first time was followed by depressed prices for many years.

More recently gold peaked in 2011 at $,1920 and declined to around $1,040 in late 2015. In this chart of the GLD, above, the levels are different but you should get the picture.

The market would turn more bullish if gold could break and stay above $1,300 on a weekly basis. There is also significant resistance around $1,500.

A break of supports around $1,160 and $1,120 would probably precipitate lower lows.

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