Gold Weekly ChartGold has been testing its long term support level for three weeks. I expect we'll see price start to move quickly sooner than later but there is potential for it to tread water here until the second half of April. We all know the saying "sell in May and go away," and as we get closer to that date we should start to see money flow into the "safe havens" being gold, silver and miners. While this has not happened many times on the charts I am thinking beyond them and of where the masses are likely to flock when stocks lose their luster. Also if you have been following the price of the dollar index you know that it's getting a little overbought and when it starts to correct the falling dollar should help send precious metals higher.
Gold & Silver Miners VS Gold Bullion PerformanceThe stock market has certain chart patterns that tell chart readers what the holders of that particular investment are feeling emotionally. Knowing how to read these extreme patterns can yield some big gains and works for most investments types (stocks, bonds, commodities and currencies.) Without getting into the boring technical details, precious metal stocks are starting to show signs of panic selling which typically happens before a major bottom is put in place. A bottom generally takes a week or two for some type of bottoming pattern or base building to form. This is the most volatile time to be trading these investments so trade with caution.
Gold Miners Bullish Percent IndexBullish percent indexes are a great way to see how popular an investment is. If you do not know what a bullish percent chart is then you can look it up online and learn more. The way I read it is when it's up over 75 to 80 it's a popular investment and everyone is buying it. It also means it's in a major uptrend. But you must be aware that when everyone is buying something once price starts to turn down you better be one of the first few out the door before everyone else runs for the door and price crashes. It's similar but reversed for investments that are below 20. Everyone is selling, no one wants to own it but once the selling momentum stops price should rebound and rally. Keep in mind this indicator is not great for timing, but confirms that what you are looking at is either oversold, neutral or overbought in the big picture.