Checking In On Gold ~ market folly

Friday, February 12, 2010

Checking In On Gold

We wanted to highlight MarketClub's recent video on gold given that we've been keeping an eye on the precious metal. After all, tons of prominent hedge funds have assembled large stakes in gold and we'll highlight all the resources we've posted at the bottom of the article. But taking a quick technical look at the metal, they are seeing two major conflicting patterns and will ultimately need a resolution. Click below to watch the video:

In their video, they draw a trendline from November of last year to present action and you'll see that gold recently bounced off the bottom of that support. At the same time, there has been a downtrend over the past few months that has caused a stir amongst gold bugs. The main thing to watch for is a break in either direction of the triangular pattern that has taken shape. MarketClub thinks that gold will be trapped in a trading range for a little while before ultimately heading one direction. The simple thing to do in the mean time would be to get long on a break to the upside of the pattern, and exit longs/get short on a break to the downside. But for now, the longer term trend is still up. Check out their thoughts on gold.

Next, shifting more towards a fundamental view, we have covered a plethora of in-depth resources regarding the investment case for gold. Below is a list of hedge fund research we've assembled and highly recommend for those of you puzzled by the precious metal:

- An in-depth look at John Paulson's gold fund & bet against the US dollar (Paulson additionally owns a ton of exchange traded fund GLD as a hedge to his fund share class denominated in gold).

- Global macro hedge fund Woodbine Capital has taken a different stance on the precious metal and penned their research in Gold: The Anti-Goldilocks.

- John Burbank & Passport Capital's rationale for owning physical gold versus other proxies.

- David Einhorn is also storing physical gold (hedge fundGreenlight Capital).

- Sprott Asset Management (Eric Sprott) launched a physical gold trust and also published research entitled, The Ultimate Triple-A Asset

Meanwhile, you have legendary investor George Soros recently out saying that gold is the ultimate bubble. As you can see, there are quite a few prominent players interested in the metal, so at the very least it's worth monitoring the situation.

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