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					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 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.
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 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.




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.




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: Chris@TheGoldAndOilGuy.com

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.

				
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posted:9/14/2011
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