My mother told me that if I did not have anything nice to say, I should not say anything at all. Well, that is why you have not heard from me about GLD for quite some time. When I wrote about it last, many were certain it was going to break out again, but I suspected we would continue to consolidate, and we have.
So, there has been nothing for me to really add to the conversation for months, so I have been rather quiet regarding the metals.
There has been no more frustrating chart to track than GLD over the last 3 years. It has had several setups in which it could have broken out and has broken each of them over this period of time. But we are now coming to the apex of the length of time in which it can continue to consolidate before it breaks out.
However, as I write this update, the metals are in a precarious posture. While we correctly called for the recent “bottoming” in the complex, the rally thus far has been quite lackluster. In fact, if it does not follow through to the upside in the coming week, it could easily roll over and drop much more than many currently expect.
So, we are now at a point of inflection. And, I will describe what I am generally seeing through the lens of GLD.
To put it quite simply, a 5-wave structure provides for us a primary trend, whereas a 3-wave structure is suggestive of a corrective structure. And, thus far, GLD only has 3 waves up off last week’s low. If GLD can muster a 5thwave higher in the coming week and pull back correctively thereafter, then we have our first indication of the next bull market phase having begun. And, my minimum next upside target for that structure is the 138 region, and rather quickly.
However, should GLD fail to muster that 5th wave higher and then break below this past week’s low, it points us down to the 113-115 region from where I would then expect it to begin its next major bull phase, also pointing rather quickly towards the 138 region.
Please note: This article was originally posted on FATRADER.com on Friday May 24th.
By Avi Gilburt
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Speaking of this particular gold fund, I've been trying to do my due diligence into the SPDR Gold Trust (GLD). Anyone know why there is a clause in the GLD prospectus that states GLD has no right to audit subcustodial gold holdings? Why would the organizations behind GLD forfeit this right and create such a glaring audit loophole? I have not heard a single good reason for the existence of this loophole thus far. It also doesn't help that GLD claims to be fully backed by physical gold bullion but yet it refuses to give retail investors the right to redeem for any of these ‘claimed’ gold bullion. There are a number of other red flags as well from what I'm reading:
"Did anyone try calling the GLD hotline at 866?320?4053 in search of numerical details on GLD's insurance? The prospectus vaguely states "The Custodian maintains insurance with regard to its business on such terms and conditions as it considers appropriate which does not cover the full amount of gold held in custody." When I asked about how much of the gold was insured, the representative proceeded to act as if he didn't know and said they were just the "marketing agent" for GLD. What kind of marketing agent would not know such basic information about a product they are marketing? It seems like they are deliberately hiding information from investors."
"I remember there was a well documented visit by CNBC's Bob Pisani to GLD's gold vault. This visit was organized by GLD's management to prove the existence of GLD's gold but the gold bar held up by Mr. Pisani had the serial number ZJ6752 which did not appear on the most recent bar list at that time. It was later discovered that this "GLD" bar was actually owned by ETF Securities."