Of all the investment opportunities that exist in the world, few can claim to have the devoted fan base that gold seems to enjoy. And yet, for all its appeal with the so-called gold bugs, this precious metal has nearly as many skeptics, who never pass up an opportunity to trash the virtues of owning expensive rock.
But somewhere in between these polarized factions exists a cadre of opportunists, free of any bias, who simply follow trend lines to determine on where prices are heading. Jonathan Krinsky, chief market technical analyst at Miller Tabak & Co, is one of them.
"From a price level perspective, oftentimes when you break down from a level, you retrace and then there's a lot of overhead supply that makes it difficult to push materially higher," he says in the attached video. "I think that's where we're at right now."
Loosely translated, that means he thinks all the people who thought they were buying the low after gold crashed 20% back in April, and are just now getting back to even today, "they're more likely to become sellers than buyers" as the price goes up.
For the record, when Krinsky was on Breakout a month ago, he correctly recommended that investors stay short gold and to get long crude, when they were at $1330 and $98 respectively.
While he acknowledges that gold has just moved above its 50-day moving average for the first time in months, he says "the slope of the averages" is actually more important.
"So we still have a declining 50-day, a declining 100-day and a declining 200-day. I'd really like to see those flatten out and start to turn higher before I feel better that a meaningful low is in."
But for all the excitement around gold's 10% rebound in July, it pales in comparison to the 20% bounce that the Gold Miners (GDX) have made this month. Here, Krinksy is also taking a tactical, studious stance, and urges investors to look at the ratio between the miners and gold.
"If that starts to turn higher, then maybe its time to look at the miners as opposed to the metal," he says, adding that a surge in silver would also be a good indication that metals are in an uptrend again.
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