Having dinner at a friend's house Sunday evening the question came up over cookies and coffee as to what to buy in this environment, which tells me investor attitudes are starting to change.
Gold prices are very firm Monday morning. A check of prices Sunday evening shows that the round number of $1700 was reached. Another milestone of sorts.
Keen observers may have noticed that in recent weeks the trading pattern of gold has changed. Dips or pullbacks look like they have become shallower as traders are becoming more aggressive, in my opinion. A shallow dip is jumped on now as an opportunity to add to existing long positions.
Let's check out some charts Monday morning for some chart points on SPDR Gold Shares ( GLD) and maybe other ways to participate.
In the daily bar chart of GLD, we can see that prices have been in an uptrend for some time now. The rise started long before the fear of the coronavirus became apparent. These fears are amplifying a move that was already in force, in my opinion. Prices recently tested the rising 50-day moving average line. The last time prices got close to the rising 200-day moving average line was last April/May -- someone had some foresight.
The On-Balance-Volume (OBV) line is at a new high and has been strong the past 12 months. The Moving Average Convergence Divergence (MACD) oscillator turned up above the zero line in late December and it is still bullish now.
In the weekly bar chart of GLD, below, we show (again) the big base pattern that goes back to 2013. Impressive and capable of supporting a big move up. Prices are above the rising 40-week moving average line.
The weekly OBV line and the MACD oscillator are bullish.
In this daily Point and Figure chart of GLD, below, we can see that the software is projecting a potential upside price target in the $198 area. A new high for the move up was made last week.
In this second Point and Figure chart of GLD, below, we used weekly price data and here the price target is $202. If you asked a long-time "gold bug" they would readily give you higher targets.
Another view of the precious metals market can be seen in this weekly close-only Point and Figure chart, below, of Fidelity's precious metal mutual fund with the symbol ( FSAGX) . I have no ties to Fidelity and use this fund as an example of where prices might be headed. Here a price target of $42.50 is indicated.
Bottom-line strategy: The general public will, I believe, be slow to warm up to precious metals. I think people do not understand it or do not trust it or had been hurt in the early 1980s and that memory is keeping them on the sidelines. Markets go through cycles and I think the upcycle in gold has further to go.
