Green Lights For Gold Price

London (May 14)  Our view is that gold and silver are money. However, in today's financial system they are traded primarily as paper derivatives. One day, we believe that precious metals will be set free from their paper chains and leap in value. We can't predict the timing of this inevitable monetary reset; therefore, our strategy is to remain long precious metals while occasionally hedging downside risk.

We write regular columns on the SPRD Gold Trust (NYSEARCA: GLD) and the iShares Silver Trust (NYSEARCA: SLV) which outline our week-ahead views and positioning.

Summary View

Last week, we issued some cautions on GLD for the upcoming week. After falling for 2 days, GLD recovered to close the slightly down on the week. The near-term bottom appears to be in place, and all of the indicators that we track suggest either a favorable or a bullish near-term picture. We see many green lights for gold for the week ahead.

We added to our positioning in both SLV and in precious metal mining stocks last week. The summary of our metrics for gold and silver are shown below.

 Technical Picture

After falling dramatically below its 50 week SMA two weeks ago, GLD appears to have found a bottom at its 100 week SMA, as below. Some analysts that we follow suggest that GLD needs to fall to the lower support line near 110 in order to have enough momentum to break through the overhead resistance line above. That could be the case; however, for the upcoming week, we expect a relief rally at a minimum in GLD .

Source: SeekingAlpha