Friday, January 10, 2014

Key month for gold

The price of gold has been forming a descending triangle pattern for the past year or so, as shown by the chart for the gold ETF (GLD).

Normally these patterns end with the price falling through the flat floor of the triangle, which is at about $115 for GLD, or $1200 per ounce of gold.  Given how close the two trend lines are, the price has to resolve one way or another very soon.

I don't usually look for short-term plays in a single investment, but the clear price pattern in this case is almost too good to pass up.  If the gold price falls through the lower support line, then I'll consider jumping into the ProShares ultrashort gold ETF (GLL) that goes up in price when gold declines.