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Gold Signals Gone Wild!

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Gold Newsletter Signals – This week gold signals are popping up everywhere in our collection of gold exchange traded funds. This is a quick gold sector updated on the current price action of some of the best gold exchange traded funds.

How to Find Low Risk High Return Gold Signals
First step is to have a GOAL, Then FIND what trading tools are needed to fit your trading goals.

My Trading Goals
First – My focus is to wait for high probability trades. I do not want to make any more trades than I need to. More Trades = More Risk for my hard earned money. Waiting for a high probability trade is difficult but must be done to generate consistent profits. I wait for gold to find a support or resistance level then look for gold signals in my hand picked collection of gold exchange traded funds like GLD, DGP, GDX and many more…

Secondly – I don’t like to hold stocks or funds any longer than I need to. Most of my trades are short term and only last 2-10 days. Some trades last 1-2 months if gold is making a large move but this is something that only happens every now and then.

Thirdly – My goal is to make 2-5% on each trade and I am happy. With 10-20 trades per year at 5% it’s not a bad return on investment.

Last – Once I am in a trade and it looks like our position is about to roll over, I will lock in some profits by selling some of the position to capture a higher % profit. This is crucial if you want to consistently make money trade after trade.

Find the Best Trading Tools for Reaching the Goal
Experience has proven that the following tools and rules allow me to not only find accurate gold signals but to minimize overall risk and increase the average profit per trade. This took a long time to fine tune, but it all came back to the basic indicators and technical analysis we all learn day one of trading. The only difference is that I have a Goal, Tools and Dedication to Follow Through with my trading model. I share this information and support with members in my Gold Newsletter Service.

My Trading Tools
MACD – A popular technical indicator system that combines several moving averages to better show a stock’s trend and momentum.

Price Relative – Technical indicator that compares the performance of two gold exchange traded funds to each other by dividing their price data.

Breakout Buy Signal – This is when the price of an exchange traded fund closes above our resistance trend line and the MACD cross’ to the upside confirming the trend line break. This is the first requirement for a tradable bounce.

Breakout Sell Signal – This is when the price of an exchange traded fund closes below our support trend line and the MACD cross’ to the downside confirming the trend line break. This is the first requirement for a tradable breakdown.

Upside Reversal – When the price of a fund closes higher than the previous days high.

Downside Reversal – When the price of a fund closes lower than the previous days low.
Maximum 3% Risk Trading Rule – I do not enter any trade in GLD, GDX, ASA, XGD.TO that has more than 3% risk. This actually allows me to miss several trades, which would end up losing.
This trading model is simple. Enter a position when we have a low risk setup, and exit on a trend line break. It’s best not to enter a trade if risk is more than 3%.

Gold Miners Index – Multi Year Trend Chart

Gold Stocks At Support

Gold Stocks At Support


Currently bouncing off support, which increases the probability that we could have a nice rally.

Gold Bugs Index – Monthly Gold Signal Trend Chart

Gold Newsletter Trend Look

Gold Newsletter Trend Look


The Monthly Gold Bugs chart is trying to give us a sell signal, but gold stocks are making a strong push higher.

$HUI: $GOLD Ratio Chart – Weekly Gold Signals

Gold Newsletter Weekly Trend

Gold Newsletter Weekly Trend


Looks like the price of gold stocks have corrected and ready for rally

Gold Bugs Index – Daily Gold Signals

Gold Newsletter Gold Bugs Index Chart

Gold Newsletter Gold Bugs Index Chart


The HUI is my barometer to gauge the strength of a potential gold trade.

GLD Gold Exchange Traded Fund – Gold Trading Signal

Gold Newsletter Gold GLD Chart

Gold Newsletter Gold GLD Chart


GLD is a low risk trading vehicle providing the best win/lose ratio of any other fund I have traded.

DGP Exchange Traded Fund – Gold Trading Signal

DGP Gold Newsletter Daily Chart

DGP Gold Newsletter Daily Chart


DGP is a leveraged gold ETF providing twice the price movement of GLD.

GDX Exchange Traded Fund – Gold Trading Signal

GDX Gold Newsletter Signals

GDX Gold Newsletter Signals


This gold exchange traded fund holds a basket of gold stocks.

XGD.TO Canadian Exchange Traded Fund – Gold Trading Signal

Canadian Gold ETF Newsletter

Canadian Gold ETF Newsletter


Gold exchange traded fund for Canadian traders.

Finding low risk trading signals is a simple process but entering at the right time is the key.

Conclusion:Gold’s recent price action has not been easy for most traders. Above are the basics of what I look for when looking for gold signals and trading. If you have any questions please send me an email.
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DZZ Gold ETN – How to Short Gold by Going Long

DZZ Double Gold ETN is a relatively new way to take advantage of gold price action. This gold fund provides double the movement that the GLD ETF or the price of gold does, providing bigger opportunities in the gold sector. I have just recently started to use DZZ ETN for trading and have found it to be very useful, which you will see in the charts below.

A Couple of Benefits of the New DZZ Gold ETNThe fact that it’s a leveraged fund provides more of an opportunity to the small investor, as they can have twice the amount of gold exposure without having to use margin, pay interest, and open a margin account. While trading with leverage is a two sided knife, if done properly, potential higher annual profits can be obtained.

Another reason gold ETN’s are becoming popular is because they allow gold traders and investors to trade both sides of the gold sector within their 401k, IRA and for Canadian their RRSP accounts. Being able to take advantage of the short side during bear market conditions, can double your annual return on investment.

Now let’s look at our current charts and see how this fund can be used.

Gold Bugs Index – Monthly Gold Chart Breakdown

Gold Stocks Index Monthly Breakdown

Gold Stocks Index Monthly Breakdown

As you can see on the monthly chart, the gold bugs index is breaking down below our support trend line. We could be entering a much larger consolidation phase or maybe even a bear market. It really does not matter, as we can take advantage of both sides of gold (long and short). The short side actually has more potential in my opinion, but most traders prefer to trade the long side as it’s what everyone learns first and feels comfortable with.

Gold Miner Stocks Index – Weekly Chart Breakdown

Gold Mining Stocks Weely Breakdown

Gold Mining Stocks Weely Breakdown

The gold miner stocks index has given us a breakdown, as well as showing that a short play is not fighting the current short term trend of gold. It is now testing support, which means short traders should tighten their stops to lock in more profits when gold decides to bounce.

Gold Bugs vs Gold Price – Weekly Gold Chart at Support

Gold Stocks vs Price of Gold Chart

Gold Stocks vs Price of Gold Chart

Gold stocks are testing a support level, as they have declined in value against the price of gold, showing that a large number of investors have been scared out of their positions and thus forcing gold stocks down more than normal.

DZZ Gold ETN – How to Short Gold by Going Long

DZZ Gold ETN Short Trading Signal

DZZ Gold ETN Short Trading Signal

Recently we had a buy signal for the DZZ gold ETN, which has provided an excellent low risk setup near the end of July. Currently the trade is up over 28% in just 3 weeks. While we look for the same type of setup for going short, there is one important point to note. When trading GLD or any other stock, index or futures contract to the long side it’s important not to enter a setup with a steep vertical support trend line, as it generally will not continue for any length of time. But trading to the short side like this DZZ trade, the trend lines can be steeper, as prices generally drop much faster, thus pushing our Short Gold ETN fund higher.

This is just one example of how to trade gold to the long and short side, if you would like to learn more please visit my website: www.TheGoldAndOilGuy.com

Gold ETF – The Gold ETF Experience

GLD Gold ETF – Taking advantage of the gold market using the GLD exchange traded fund to generate consistent profits in any market condition.

As I mentioned before, the past 5 months have been very frustrating for most traders as we are stuck in this sideways price action. I also noted that August to December is generally the stronger months for gold. Although gold has been under selling pressure during the last 4 weeks I think there is light at the end of the tunnel. It’s usually the darkest before dawn, but there are some hurtles for gold to over come before we are in the clear which I explain below.

Chart 1 – The Gold Mining Stocks Index
This is a 10 year chart with a cup and handle pattern complete with a breakout. As you can see in the chart below gold mining stocks have continued to collapse below their support level. This does not mean gold is going to follow but it is a red flag which needs to be noted for future long entry points. Gold mining stocks in general are seen as volatile and high risk types of investments so I understand why investors are unloading their positions to lock in profits.

Gold Mining Stocks Index

Gold Mining Stocks Index

Gold mining stocks are pushed below long term support level.

Chart 2 – Gold Stocks Index
This is an 8yr chart of the price action of gold stocks and you can see that they are currently testing long term support levels. If this monthly bar closes below this trend line then long term investors should be sitting in cash until we have a new opportunity to enter long or short. The HUI generally makes the move before the price of gold so I follow the HUI in all time frames.

Gold Stocks Index

Gold Stocks Index

The HUI is testing long term support.

Chart 3 – Performance Chart (Gold Stocks vs Price of Gold)
The past 2 years from 2006 to present gold stocks have slowly been underperforming the price of gold. This is generally not a good thing to see if we want higher prices for gold. But the good news is that gold stocks appear to be reaching levels at which new rallies have started.

Gold Stocks vs Gold Spot Price

Gold Stocks vs Gold Spot Price

Gold stocks under performing the price of gold but near support.

Chart 4 – Daily HUI Chart
I follow the HUI like a hawk as it fine tunes my entry and exit point for trading GLD, DGP and DZZ funds. Last month the HUI made a lower high and a lower low which is a red flag. While I don’t predict prices I am thinking these lower prices for gold stocks are just panic sellers over extending a sell off. I would really like to see an August rally kick into place.

HUI Gold Stocks Index

HUI Gold Stocks Index

The HUI makes a lower high and lower low on the daily chart.

Chart 5 – GLD Gold ETF Chart
While gold stocks have been selling down, gold has so far been able to hold some ground. As you can see in the chart below the last three months gold has made higher highs, and higher lows. Currently gold is testing Major Support at the 200 EMA.

GLD Gold ETF Trading

GLD Gold ETF Trading

Gold ETF GLD at long term support still holding its ground.

Conclusion:

My analysis of gold using the charts provided above shows that gold stocks and indexes are oversold and are at major support levels. Thus an August rally is not out of the picture and we could have some favorable setups in the near future. I would prefer higher prices, but in the end movement is movement and we can profit in either direction evenly.

GLD gold etf trading for me is the most accurate trading vehicle I have come across. I have been using my proven trading model which avoids the price gaps and keeps risk under 3% for each trade. GLD makes it simple to profit from the markets using a proven trading model for trading long and short term gold setups in all market conditions (bull, bear, and sideways).

My focus for short term trading is simple. Wait for a breakout which satisfies my trading model, enter the trade and then exit 50% of position on the first sign of weakness. Exit second half on a trend line break. My goal for GLD ETF is 2-5% and we are in trades for 2-10 days unless prices continue to run. I generally have 10-20 trades per year with gold.

Chris Vermeulen is Founder of the popular trading site TheGoldAndOilGuy.com. There he shares his highly successful, low-risk trading method. For 6 years Chris has been a leader in teaching others to skillfully trade in gold, oil, and silver in both bull and bear markets. Subscribers to his service depend on Chris’ uniquely consistent investment opportunities that carry exceptionally low risk and high return.

Reach Chris at: www.TheGoldAndOilGuy.com

Gold Investment Fundamentals and the Transfer of Capital

The Secular Bull Market in Gold Investments corresponds directly to the Secular Bear Market in Financials. We explain why this trend will continue and why a short-term buying opportunity in Gold presents itself.
Central Banks are in all sorts of a pickle.

With overwhelming evidence that the global economy is slumping badly:
* UK Retail Sales see Worst Slump in 20 Years
* Business confidence in Germany is at lowest level in 2 years
* New Zealand’s central bank cutting interest rates saying slowing economic growth will curb inflation.
* Japanese exports decreasing YoY, and imports climbing on record Oil prices.
* US unemployment at 4-year highs

The knee jerk reaction by central banks is to man the printing presses and hit the accelerator. And whilst this medicine has worked well over the last 25 years, Central Banks are now hitting a brick wall that they haven’t encountered since pre-Keynesian 1930s.
Freshly minted fiat currency is falling into the hands of a crippled banking sector with little capital, ability or desire to carry out the multiplier effect and make loans to real people in the real economy. In a debt laden global economy with no reverse gear this headwind is possibly the biggest threat the Federal Reserve and its ilk aka the establishment have ever faced in carrying out monetary policy

Point #1 – Gold investors are well aware of the risks inherent in the current financial system.

The beauty of capitalism and the associated free movement of capital is that smaller more focused entities aka Hedge & Private Equity funds can and are rapidly moving into long held banking preserves.
* Direct lending to mid and small cap entities is now a well worn hedge fund territory.
* Extracting value through Shareholder activism.
* A much larger pool of capital available for short selling.
* Private Equity funds increase investment time horizons.
Highly secretive and operating out of non-transparent domiciles these entities are by and large out of the reach of the central banking system.

Point #2 – Hedge Funds and Private Equity Funds do not benefit from Fed handouts and would be better served by a currency that acts as a stable store of wealth – Gold !

The transfer of the financial system is akin to the explosion of information on the internet. The players that used to have a monopoly on information become less effective. There will be winners and there will be losers. But right now a bet on Gold Investments like Gold Stocks and Gold ETFs is a bet against the Establishment and the out-dated mega-banking system.
Slower growth will continue to cause problems for financials as bad debts soar, and as a result Gold investments will continue to propel higher in its multi-year Secular trend.

Gold Investment Chart

Gold Investment Chart

Figure 1 – Gold Bull Market (GLD) accelerating as Financial Fears grow bottom (Gold ETF – GDX outperforming Financial etf -XLD)

Short-Term Opportunity

The above trend stretched too far technically over the last 3-months and there has had a rapid reversal over the last 2 weeks. This is a technical pullback only and the above fundamentals have not changed. There’s more to come in this fundamental story and Gold investments (we use GLD gold Exchange Traded Fund) and we could be getting close to another buying point for gold soon

Gold Chart For Investments

Gold Chart For Investments

Gold Investment GLD – $85 is strong support as a confluence of lateral support (green) and the 50-week Moving Average converge. Its just a matter of time before we have another entry point to add to our positions and or make another profitable gold investment.

By Chris Vermeulen
chris (AT) thegoldandoilguy.com

Chris Vermeulen is Founder of the popular trading site TheGoldAndOilGuy.com. There he shares his highly successful, low-risk trading method. For 6 years Chris has been a leader in teaching others to skillfully trade in gold, oil, and silver in both bull and bear markets. Subscribers to his service depend on Chris’ uniquely consistent investment opportunities that carry exceptionally low risk and high return.
This article is intended solely for information purposes. The opinions are those of the author only. Please conduct further research and consult your financial advisor before making any investment/trading decision. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

The Gold ETF Experience

Gold ETF Trading – Taking advantage of the gold market using the GLD ETF to generate consistent profits in any market condition.

Gold’s price action in the past 5 months has frustrated many traders. Especially those who have difficulty making money during consolidation periods which are in. The past couple months are consistently the weaker months for gold prices year after year. That being said August through year end have been consistently strong for trading gold and gold ETF’s.

Chart 1 – Gold Spot Price, you will see that gold found support at the 50 exponential moving average and also found major support at the 200 EMA. August is just around the corner when gold generally picks up steam, which you can see in the chart below in 2007.

Gold Spot Price Chart

Gold Spot Price Chart

Gold at support levels and entering August

Chart 2 – The Collapsing Dollar looks to be struggling at resistance and making a lower high and lower low (bear Trend). If the USD breaks down it should slide to the 67 cent level and send gold soaring for 2-3 months.

Gold Price vs the UD Dollar

Gold Price vs the UD Dollar

US Dollar at resistance making lower highs and lower lows.

Chart 3 – A close up chart of the USD, you can see its currently at the top of its Bollinger Bands and just made a lower low 2 weeks ago. Head and Shoulders anyone….

Gold ETF Analysis with the Dollar

Gold ETF Analysis with the Dollar

Weak dollar at top or range with head and shoulders pattern

Chart 4 – GLD Gold ETF is my trading vehicle of choice and is currently at support making higher highs and higher lows (bull trend). While this does not provide a buy signal with my daily trading model, it does provide an excellent trading opportunity for an intraday trade as we should see prices make a move much higher or much lower within the next couple days.

GLD Gold ETF Trading Analysis

GLD Gold ETF Trading Analysis

GLD Gold ETF is poised for a move, does not matter which way at this point thought.

Chart 5 – Recent Gold ETF trade. My focus for short term trading is simple. Wait for a breakout which satisfies my trading model, enter the trade and then exit 50% of position on the first sign of weakness. Exit second half on a trend line break. My goal for GLD ETF is 2-5% and we are in trades for 2-10 days unless prices continue to run. I generally have 10-20 trades per year with gold.

GLD Gold ETF Trading Charts

GLD Gold ETF Trading Charts

My recent Gold ETF trade which profited 3.4% with very little down side risk during a sideways market.

GLD trading for me is the most accurate trading vehicle I have come across. I have been using my proven trading model which avoids the price gaps and keeps risk for each traded under 3%.

Gold ETF funds makes it simple to profit from the markets using a proven trading model for trading long, and short term gold setups.

Chris Vermeulen
http://www.TheGoldAndOilGuy.com

Junior Gold Stocks

Junior Gold Stocks – With the Stock Market Panic behind us – for now – we are settling in for a range bound, relatively calm, second half of ’08. Junior Gold Stocks should finally start to benefit as the wet blanket smothering equity markets lift.

The New York Stock Exchange indicator for new lows reached an extreme of 1304 on Tuesday the 15th of July. That was even worse than the 1100 new lows reached on the 22nd of January. Such extremes spell one thing P-A-N-I-C.

Whilst it’s difficult to infer any far reaching conclusions about one day sell-offs, even panics, the odds now favour a bounce in very oversold equity markets. As for how high and how long the stock market will bounce is anyone’s guess, but here again, probabilities favour the market to move higher and longer than anyone expects so that sentiment indicators return to their old complacent Bullish state!

What will work during this period of ‘relative’ calm?

We had noticed a very definite flight to safety since market volatility began in October ’07.
Firstly, a flight away from common Dow stocks to Gold Stocks:

(The following charts show relative performance of asset classes to each other. That is, when the chart is falling the first asset class (DOW) is underperforming against the second (Gold Stocks).

Junior Gold Stocks

Junior Gold Stocks

Chart 1 – Large Cap Gold Stocks (GDX ETF) have outperformed the Dow (DJIA) since August 2007

Within the Gold market this has manifested itself as a flight to bullion and away from Junior Gold Stocks:

Junior Gold Stocks Analysis

Junior Gold Stocks Analysis

Chart 2 – Gold Stock ETF has underperformed against Gold Bullion ETF since August 2007
And a shift from smaller more speculative junior Gold mining companies to their large caps cousins:

Junior Gold Stock Investing

Junior Gold Stock Investing

Chart 3 – Minefinders (for example) has under-performed against the large cap Gold Stock ETF
Now that there is a good chance equity markets will stabilize, the above trends will moderate and reverse. This means Junior Gold stocks prices should begin closing the valuation gap and discounting higher earnings based on $900+ Gold.

The remainder of 2008 looks set to be very bullish for Gold Stocks and Gold Stock Juniors in particular!

More commentary and stock picks follow for subscribers…

Gold Stocks – The Next Winners

Gold Stocks – A contrarian view on where the next Gold Stock winners will emerge.

Searching for the Golden Goose?

For years we have been speaking and writing about the massive bind the Fed now finds itself in. With price inflation rising – read as food and energy skyrocketing — and little hope for nominal interest rate increases – read as housing too weak for higher rates – negative Real Interest Rates (nominal rates less inflation) looks set to persist for some time.

Now why is that important?

Firstly, not only do negative real interest rates make holding non-income producing assets such as Gold attractive, but an environment where inflation is allowed to have its way and economic growth is sick (stagflation), is tantamount to the perfect storm for Gold Stocks and other Precious Metals!

So what do you do?

You load up on assets leveraged to the price of Gold – namely Gold stocks.

Wrong!

As Old Gold Bulls we have seen this situation before. A low growth high inflationary environment is poisonous for equities – Gold stocks included. And whilst the storm persist in the equity markets it will either drag gold stocks lower or prevent them from fully expressing themselves to the upside! That’s why we encourage investors to have a portion of their portfolio exposed directly to the metal either through ETFs, Futures or Physical:

Investing in Gold Stock

Investing in Gold Stock

Chart 1 – Since July 2007 the S&P (red) has been moving lower and Gold the Metal
(green) has outperformed Gold Equitites (red and black)
Hunting Elephants

There is no doubt that an equity risk premium has weighed heavily on Precious Metal equities and that stabilization in equity markets would certainly benefit such stocks. But that’s old news.

What we consider interesting and downright fascinating is the nature of Gold Equities investors should be focusing on over the next year.

Conventional wisdom is that the juniors are where the investment gems lie. We don’t disagree – entirely.

Over the longer term (3-5 years) the fundamentals certainly favour late stage explorers and emerging producers, but an overlooked market dynamic causes us to lean rather towards their larger cousins.

As we have alluded to above, Gold Stocks and other Precious Metal equities are equities and more often than not subjected to the same forces as the general equity market. One such force is the veritable WALL of passive indexed money. By some accounts amounting to several TRILLIONS of Dollars.

And what’s the passive indexed money saying?

Trading Gold Stocks

Trading Gold Stocks

Chart 2 – large caps now outperforming small caps

Firstly it’s saying that the long period of outperformance by small caps versus large caps (chart 2 is falling) bottomed in 2006 and the trend has since been towards large caps.

Secondly…

Gold ETF Trading

Gold ETF Trading

Chart 3 – large cap growth has outperformed value since late 2006

The trend in large caps from value to growth (chart 3 is falling) also looks to have bottomed around late 2006. We define growth as earnings growth of +15% p.a. and/or PEG ratio of around 1.5.

These trends resonated well with us as large cap Gold producers beat out small cap miners over the last year leaving many a gold stock speculator highly frustrated.

Gold Stocks – Where to find such Elephants that will benefit from these trends? We would begin by looking at components of the Gold Stocks ETF (GDX) or the Amex Gold Bugs Index (HUI). Chris Vermeulen