Another View On Gold...Not My View...But Good To Look At Others Opinion

Time To Buy Gold?

Kevin's Market Blog, March 21, 2013. The stage is certainly set for a short-term rally in gold, but the long-term trend is down. So far, upward price movement has been too weak to convince me that is going to change. Long-term trends in gold can be very persistent. I'd say there is a good chance that the support at 1500 will crumble and the price of gold will continue to fall.

Above is a daily chart of gold (GLD) over the past 20 months and as you can see this market appears to be bouncing off of major support (green line). In the lower panel is the Gold/S&P ratio which has just broken its 4 month down trendline suggesting that money is now moving into gold and out of stocks.

You'll notice red vertical lines on the chart which are exactly the same distance apart. As you can see there seems to be a major change of sentiment that takes place in gold every 4 1/2 months. The reason I consider this significant is because gold appears to be reacting to this time cycle once again making a turning point precisely on schedule.

The next chart is a 4 year weekly chart of gold futures with the net position of the commercials which is the red line in the lower panel. The commercials are holding their largest long position in years which in my opinion is bullish. The last time the commercials held such a net long position was back in June of last year which triggered a nice 3 month rally. I think we are going to see a similar rally so this is definetly a market to keep an eye on. As always, lets see what happens!