Monday, October 15, 2007
Here are two point and figure charts of GLD, the gold ETF. The price of GLD (multiplied by 10) tracks the price of spot gold very closely and I like to use it as a good proxy for gold futures as well.
For the past 15 months I have believed that the May 2006 top at 732 was the end of the bull market in gold. The price action of the past month has shown this view to be wrong. So what lies ahead?
The point and figure charts you see above both point to the 79-81 range as the next stopping point for GLD. This corresponds to a range of 790-810 for spot gold. Longer term I still do not expect the spot price to go higher than its 1980 top at 850. I think that the entire trading during the past 15 months which developed between 550 and 700 showed many more signs of distribution than of accumulation, especially since it occurred near the high end of the rang for the past 25 years.