Gold is Getting Interesting

Looks like Gold is gearing up for a run up to the old December highs. Will it break through them if it trades up there? Probably. Regardless, gold is a good trade right now.

You hear a lot of people talk about gold being a good hedge against inflation but if you study history, gold outperforms in periods of deflation. Ahh...negative real interest rates. Sounds familiar huh. Well there's the story that might push it up. What about the technicals? Here's a weekly chart of GLD:This week GLD broke out of a multi-week trading range. On top of the break out, I like the bullish MACD cross over and that the BB Width (Bollinger Band Width--a measure of the distance between the high and low bollinger bands) is relatively low...this indicates that there is room for gold to move up.

I'm in this trade, although I'm not using GLD. I'm monitoring my trade with GLD but using one of the leveraged ETNs. I'll be looking to exit this trade when and if the BB Width kicks up to the 20-25 range or above.

For full disclosure purposes, I am not a gold bug at all. I don't get all excited about gold...you know what I'm talking about, the gold bugs that really love the stuff...always. Well that's not me. I do, however, love a good trade and this one could be good. As always, enter at a spot where you can mange risk and be ready to pull out when wrong...that's key.

Hope everyone had a great week!

TLT