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  • extreme4reality extreme4reality Aug 27, 2011 9:44 AM Flag

    Gold bubble ending with head and shoulders top

    "So if you predict GLD will drop to $145, do you assume the stock market will rally?"

    Gold often and usually moves in the same direction as oil and the markets. 3 years ago gold fell to $700 as the market crashed.

    Sometimes in the early stages of an coming return to recession folks pile into gold for hoped-for safety but they drive the price too high. Gold is only a safe-haven at lower prices.

    As the economic downturn continues and markets fall and commodities fall, folks sell their high-priced gold at a profit to cover their other losses and to raise cash to buy other things that have gone on sale. This starts to collapse the price of gold and folks start dumping to avoid losing all their gains.

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    • You have a valid long it takes before the results happen is always difficult to predict IMO.

      Look at SLV, major top at 48, went to 32, but no crash to the teens; went back to 41+.

      Barron interviewed analysts in 8/29 issue, now say for equities, the bottom was made this past week; if a temporary 3-6 weeks rise, money will head that way, and out of gold and silver profit taking.


      • 1 Reply to joetong419
      • Oil and silver topped out together at the end of April. Gold did too but got a temporary boost from the debt discussion and US downgrade that gave speculators an excuse to overbid gold.

        Now we're back to the matter at hand which is a slumping economy and falling commodities and falling demand and cash-poor consumers. That's not inflation and high priced gold is no safe haven.

        Now we have a classic head and shoulders top forming and those are usually strong signals of a coming steep drop.

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