Thursday, November 17, 2011

Gold - Trading range / consolidation

Not much going on with Gold lately. It is in a consolidation period after the run up in August.

Here is a daily chart of the World Gold Index over the past 2 years.  White boxes indicate the consolidation periods after a run-up.

It's a stepping stone pattern that has been repeated over the past 10 years. Everyone that has been dollar cost averaging into Gold has done quite well.  Both physical and the ETF's. (Investors of the precious metals ETF's should know that they will need to exit the trade should there be a divergence with the ETF and the physical price)

You can see that the current box has the tallest range over the past 2 years.  Gold dropped $52.30 today for 2.95%.  Get used to these numbers as volatility is here to stay and will most likely increase. I heard one interview where investor Bert Dohman mentioned that Gold will go up more than $100 a day in the future. The way things are going, I think that statement is pretty much a fact.

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