GOLD ETF

As the arrows indicate every time the stochastics were this over sold in the past couple of years we have rallied to a tune of 20% plus in gold prices. Yesterday, prices spiked after "the beard" spoke and a tepid jobless recovery and the need for low interest rates and more money printing (for those of you who don't know what that is, watch the bears video on youtube).

We had four weeks of selling and that took out the late comers and weak hands and the open interest dried up big time and what happened to gold in that time frame was nothing short of remarkable, gold was down only six percent. There are reports of big buyers stepping in at $GOLD 1300 or so. Looking at the chart above you see it held support right at the 30wk ma and its been doing so for months now and people found that as a great entry point where they could safely exit without much loss.

When asked by family and friends has gold topped out I asked if they could answer a few questions for me. Has anything changed? Has the fed stopped printing money? Has the government proposed anything to slow down spending? Have bonds stabilized? Has the dollar started an uptrend. Are we now paying down debt? Has the price of everything we consume (oil, wheat, rice, sugar, cotton, meat) started going down? THE ANSWER IS NO!

So what changed except for the rice of Gold and other precious metals, NOTHING!

We just got overbought, there was no frenetic climax top, we sold off a bit while the S&P rallied and the commodities index made new highs albeit without the precious metals.

If we end today above 131.60 (will give us a bullish engulfing candle) on the GLD we can look back and say this week was the bottom.