NEW YORK ( TheStreet) -- Gold bulls received a long-awaited reprieve Friday from falling prices in gold-related stocks. Volatility after the moves gold has experienced lately are expected, and some say welcomed compared to the stock market. Just be careful not to confuse a bear market rally with a bull market. We can look at where we are now and where we are headed to know why gold prices are not headed back to $1,800-plus any time soon.
Market Vectors Gold Miners ETF GDX
(GDX) closed near the 60-day moving average at $46.58 up 6.5%; gold-price-tracking ETF
(GLD) jumped over 4% to close at $157.50. GLD highs of the day came just short of the 60-day moving average, the near-term technical resistance level.
I shorted GLD twice on Friday. The first time I shorted GLD was in the afternoon near the high of the day. I covered the short about an hour later for a small gain. In the last 10 minutes of trading, I shorted again into the spike immediately before the price dropped again.I like bear market rallies as the moves are generally strong and reasonably predictable. As anyone can see looking at a gold chart, prices do not move straight up or straight down. The volatility experienced can be unsettling and unnerving, even when it is expected. (Read why I believe gold is well on its way back to $1,200 an ounce). Silver, represented with the silver trust ETF SLV (SLV) didn't fare as well as gold, climbing just over 3% in Friday's trading. Gold- and silver-related stocks are barely above the lows of 2012, trading as expected in an economic environment void of inflation. Although some have a stronger grip on the doctrine of $2,000 gold than they do on economic reality, you should not buy into this sucker bet.