Gold: It is Still a Bull Market
I am not sure what all the fuss is about. Yes, the SPDR Gold Trust (symbol: GLD) is down about 15% from its September high, but technically and fundamentally, gold is not broken. Period.
Most noteworthy is "commodity expert" Dennis Gartman's call that "we have the beginnings of a real bear market, and the death of a bull.” You can read more about Gartman's call on gold by going to this article on Bloomberg: "Death of Gold Bull Market Seen by Gartman", and Gartman was also making the rounds on CNBC as seen in this video.
Curiously, I really don't understand what Gartman is talking about. He sold is personal stake in the metal, but he is still invested in gold for his clients. I wouldn't be happy if I was that client. I guess he is only bearish for himself and not his clients.
We also have this article from MarketWatch: "Gold top was easy to see". Yes, it was so easy that I am now making the "call", and oh by the way, that "call" is about 2 months too late. Note to author of article: if it was so easy, then why weren't you short 2 months ago?
Technically, the gold bull market remains intact. This can be seen by the monthly chart of GLD, which is shown in figure 1. The pink colored price bars are negative divergence bars. 5 months ago, GLD tried to breakout of that trend channel and go parabolic, but that move wasn't to be as prices fell back into the trend channel. While failed breakouts are ominous, GLD is still within a rising trend channel and this is bullish. Looking at the negative divergence price bars, we note a cluster of these over the past year. This is a sign of slowing upside momentum not a sign of a market top. If prices close below the low (at 154.19) of the most recent negative divergence bar (0n a monthly closing basis), then it would be a market top. This would likely coincide with a close below the lower channel line. These events have not happened yet.
Figure 1. GLD/ monthly
A longer term view supports the notion that the gold bull market is not over. In future articles, I will review the bullish fundamentals and get more granular on the technicals as I view this as a buying opportunity!