Can GLD Fall More Than It Has Already?

December 20, 2012, 10:45 am ET, BY Thomas H. Kee Jr- Editor, Stock Traders Daily| Editor: Thomas H. Kee Jr. (Follow on LinkedIn)

Gold and the shares of gold miners have come under pressure recently, much to the dismay of Gold bugs.  Could there really be a material shift taking place in front of our eyes and could gold become even less favored than it has been recently?  We hear the calls all the time, analysts call for $2000 gold prices, the more they print the higher gold will go they say, but with the federal reserve now on track to print $85 billion in new money every month on an endless basis, instead of increasing as many would have guessed gold prices and the share prices of gold miners have fallen considerably. PROFIT FROM THESE STOCKS TODAY!

Over the past three months Newmont Mining is down about 21% (NYSE:NEM), Gold Corp (NYSE:GG). is down about 22%, Barrick Gold (NYSE:ABX) is down about 20%, and RandGold (NASDAQ:GOLD) is down about 17%, but the ETF that everyone interested in Gold follows is SPDR Gold Shares (NYSE:GLD), and it is down only about 5% over the same three-month period.  Although global mining slowdowns across the globe have something to do with the price declines of gold miners as well as other mining companies the declines of these gold miners may be telling us something about the future price of gold itself.  Specifically, the weakness in these gold miners could be a precursor to additional declines in GLD.

Fundamentally nothing seems to have changed, they are printing $85 Billion a month out of thin air, but a material change has actually occurred and this has skewed investor’s interest in Gold.  Interest rates have begun to increase even in the face of these endless stimulus programs, global weakness has kept the dollar strong when it otherwise would have been devalued considerably, and although anyone trying to buy a new car, groceries, or anything else for that matter, might argue with me, inflation also is not serious enough for gold to react positively.  These three catalysts not only are keeping a lid on gold prices but they may also be exactly what are causing gold prices to decline. 

How long will this last?

According to the real-time trading reports offered by Stock Traders Daily the declines can continue.  Although trading reports are offered for all of the companies listed here, including other miners that may not have been mentioned in this article, our focus is on gold so GLD is our primary interest today.  According to the longer-term analysis offered by Stock Traders Daily for GLD, GLD is rapidly approaching longer-term support, it is very close to that level right now, and if longer-term support breaks lower GLD can fall to $139 quickly.  Longer-term support for GLD according to this detailed report is $158.48.

There are many variables that play a role in pricing Gold, I have said many times before that the dynamics of these variables change so often that trading gold based on fundamentals is extremely difficult, but one thing cannot be argued with.  No matter what they say the market is always right and therefore the technical patterns are extremely important.  The market for gold and the gold miners, including GLD, are pointing to lower levels if these critical support levels break, and investors should pay very close attention to what the market is saying accordingly.

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