Gold Price News: Where Do We Go From Here?

a pile of gold money

In today’s gold price news, every day someone is spouting their opinion on a market.  Whether it’s the stock market, oil, pizza or gold, everyone has their opinion.  With the Dow closing at all-time highs Friday — and the Nasdaq and S&P 500 pulling back slightly, everyone has the same question:

Where do we go from here?

Pondering his coffee on a Monday, your Gold Enthusiast knows there are three answers:  Guessing, educated guessing, and not answering.

The first two will get you in trouble — you’re likely to be wrong about half the time.  The last won’t make you much money, which doesn’t work when the rent comes due.

Related: China Inhaled 3/4 As Much Gold As US Produced?

One thing’s for sure — this market is twitchy.  The Nasdaq had a sudden sell-off on Thursday, blame for which is now generally focused on a JP Morgan analyst paper.  It always seems a little contrived that an entire market would drop so much based on a report from one analyst at one company.  But, stranger things have happened.  As with the Kardashians, if the person is “followed” enough, other people will blindly jump on the bandwagon. And hope it’s not running off a cliff.

One very, very interesting point is that trading volatility hit all-time lows last week.  Volatility is the measure of how “twitchy” things are.  Or, according to one anonymous veteran trader, “how much selling drives more selling, instead of selling bringing out the bargain hunters.”

Related: A “Death Spiral” for Gold No Longer the Case?

While investors are busy chasing the latest hot thing, gold has quietly confirmed a base.  GLD has closed above its 200-day moving average for nine trading days now, which would normally bring longer-term investors back into the fold.  The short-term picture says similar things: GLD has closed above its 100-day average for six days straight.

July 20, 2017 to July 26, 2017 Fidelity Chart

Not all indicators are positive yet for gold.  One gold factors scorecard claims “Market Fundamentals Are Bearish.”  Not quite sure where they’re getting that, with the Fed struggling with how to unwind their overloaded balance sheet.  Maybe somehow the possibility of crashing the world’s equity markets is a good thing?

Related: Gold Mining Company Given a 200-Year Fine?

So what is a rational person to think?

There are always two sides to price, whether it’s gold, the stock market, or anything else.  One side thinks the price will go up in the future.  The other thinks — wait for it — price will go down.

The old saying that applies here is “The market climbs a wall of worry.”  Like every blade, this is a two-sided idea.  The obvious one is that the market is always worried, about something.  We’ve covered that.

The other is that if there’s worry around, the market will rise.  Folks who take this view know that the worst time to get into a market is when there is no worry, when people are talking about stocks at the water cooler, and when your barber is passing along the latest hot stock tip “from my brother-in-law who’s in finance.”

Related: Gold Awaits Interest Rate Decision

Right now there is a little of both.  Last week your Gold Enthusiast got three stock tips from random, non-Wall Streeters.  And, was told by two perma-bears that “this is it — it’s all collapsing Real Soon Now.”

By these measures, we may be getting close to the top.  But there’s still a balance in the market so it may have at least a little ways to go yet. We need a good saying about when the market goes down, something like “The market drops after pure ebulience, or in times of pure terror.”  Basically, when there’s no one left to switch from negative to positive sentiment.

And until sentiment actively turns against the market, we can expect international gold prices to stay range-bound between 1215 and 1265.  That’s as far out on the limb as this trader is willing to go.


The Gold Enthusiast

DISCLAIMER:  The author has no positions in any mentioned security.  The author is long NUGT and JNUG and may add to or sell these positions in the next 48 hours.

About the author

Mike Hammer

Mike Hammer has had a wide-ranging career, with trading and investing as a continuing theme. Mike graduated from UC Berkeley with a business degree, then worked with Macy's in their operations arm. He left Macy's and spent a summer trading his own account, which taught him a lot about trading in general and markets in particular. Trading through the Black Monday and the Crash of 1987 showed him how most people are unprepared for upheavals in their trading. He then joined Waddell & Reed as a financial advisor, helping regular people understand their finances and meet their life goals.

Then came the usual story - Mike met and married the lady of his dreams. They moved to upstate New York, where Mike worked first for a small manufacturing consulting company, then Cornell University. While loving the work and the higher-education atmosphere, Mike missed the world of finance. Eventually, he signed up for stock trading coaching with the Adam Mesh Trading Group, to learn from people who understood modern markets. Within a year, Adam asked Mike to become a stock trading coach.

Since then, Mike has trained over 200 individuals, spoke at several national conventions, and is a frequent contributor to conference calls across the Adam Mesh community. Mike writes The Gold Enthusiast daily newsletter, runs the Golden Hammer trading service, and participates in the Mesh Private Portfolio. He also keeps a position in international education which keep him in touch with "the student mindset". Mike closely follows the gold, energy, and financial sectors. His motto is "Plan your trade, then trade your plan!"

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