Gold Could Have Been Worse (GLD, GDX, GDXJ, GGN)

Gold took it on the chin today because the Euro Zone bailout is not looking quite as robust nor as inflationary as many market participants have been hoping for.  Living with disappointment is just becoming a part of every investor’s risk parameters in all sectors when it comes to trying to price in European concerns.

A snapshot from Kitco shows that spot gold is down $33.90 or -1.95% at $1709.20.  The SPDR Gold Shares (NYSE: GLD) is trading down 1.9% at $166.20 so far today.  In dollar terms, this has gold challenging a floor put in just two days ago but the stock on a longer-term basis of the last three months shows that gold could just as easily rise or fall from here in the coming days. The stockcharts.com chart on the SPDR Gold (see below) shows a different story where the 50-day moving average is becoming a magnet.  For the GLD at $166.20, the 50-day moving average is $165.97.  Its key 200-day moving average is all the was down at $156.71.

The move today, along with the weak stock market today, is sending shares of the Market Vectors Gold Miners ETF (NYSE: GDX) down by 2.3% at $57.58.  As you might expect, the Market Vectors Junior Gold Miners ETF (NYSE: GDXJ) is more volatile and more leveraged since it deals with junior miners and it is down 4.3% at $28.59.

The Gabelli Global Gold, Natural Resources & Income Trust (NYSE: GGN) is down only 1.3% at $15.95 on the day.

Gold continues to trade with an identity crisis.  The dollar has become the safe haven now that gold has pulled back and likely because it is up so much from a year ago.  Gold could have traded even worse today and perhaps that 50-day moving average in the GLD is helping to keep it from getting much worse.

JON C. OGG