“All the gold which is under or upon the earth is not enough to give in exchange for virtue.”
Commentary & Analysis
Gold Crushed – Bonds Crushed: Our subscribers are happy
We turned bearish on gold back on July 15th 2016 in our Key Market Strategist service. This service uses Elliott Wave analysis applied to actively exchange traded funds for gold, oil, long bonds, stocks, and the US dollar. Here is what we said to our subscribers back on July 18th:
GLD Daily [last 127.07]: We are now short on Friday’s close at 126.84; looking for a trade to 115.20. A move to 133.69 represents key resistance; we have witnessed declining momentum into the recent rally high (divergence), suggesting the five-wave rally to A may be complete. Despite lots of geopolitical turmoil out there (South China Sea and Turkey), gold is trading flat to down…poor reaction to the news? We think so.
We’ve also been short long bonds for a while and our subscribers are happy there too. In fact, our short long bond position goes hand in hand with our short gold idea, as there is a tight correlation between long rates and gold, as you can see in the chart below comparing TTL (20-yr long bond index) and GLD (gold etf); we most recently shared this correlation with our subscribers on Monday Oct 3rd:
GLD (Gold) versus TLT (20-yr long bond index) Daily: If you are bearish bonds, you should likely be bearish gold too…at least that is what this chart overlay tells us…
And if interested here is a look at our TLT (20-year bond index chart) analysis; we told our subscribers to go short on July 11th:
TLT Daily [last 142.34]: Going short long bonds here seems a very good risk/reward trade based on the extended sharp rally we’ve witnessed. We had a 361.8% extension target into 142.43—that has been achieved. Alternatively the rally extends to the 149 level.
Here is a look at our TLT wave analysis from 10/3/16: