I've been conflicted about precious metals for a while, mainly because two different prognosticators whom I respect – on one hand, Gary Savage, and on the other, Elliott Wave International. – have had two completely opposing views on gold's direction.
Gary is a shameless gold bull. He describes gold miners as "stupid cheap", and although he acknowledges most people will get whipsawed out of their positions, he is a very committed precious metals bull.
The folks at Elliott Wave, however, have been beating the "gold is heading under $700" drum for what seems like ages. I've been shorting GDX and GLD from time to time – sometimes with success, more recently – – not.
GLD's weird behavior yesterday (strength in the face of adversity) made me reconsider my mildly bearish position, and with today's breakout, I'm long both GLD and GDX. Looking at the graph below, you can see there are a series of progressive higher zones above which GLD must break. With each one, the likelihood of a barnstormer of a bull run gets better.
I'm not a big proponent of inverted H&S patterns at the top of a market, but there's little doubt in my mind that a breakout above 100.44, established 19 months ago, would be extremely positive for gold bulls.
