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Saturday, November 17th, 2018 - Buy Gold - Bringing you trusted gold news and gold investing information since 2006

Gold Continues to Drop; Silver Firm, Broad Based Commodities Strong

Gold (GLD) is again under pressure: On Thursday it went under its 130-day simple moving average and recovered Friday just above the moving average. Silver (SLV) recovered strongly Friday and eked out a 1.75% gain for the week. GLD is now 6.3% off its peak while SLV is now 9.5% off its recent peak. The broad based commodity index (DBC), on the other hand, is at 52-week high after Friday’s market close. For more performance details, refer here.

The trend table for commodities shown below indicates that silver (SLV), agriculture (DBA), broad based commodities (DBC) and energy (DBE) are at the top spots. GLD remains close to the bottom, along with oil (USO) and natural gas (UNG).

Assets Class Symbols 01/28

Trend

Score

01/21

Trend

Score

Direction
Silver SLV 26.43% 23.94% ^
Agriculture DBA 17.0% 16.66% ^
Commodity DBC 12.1% 11.7% ^
Energy DBE 10.17% 9.29% ^
Base Metals DBB 8.7% 5.91% ^
Precious Metals DBP 8.67% 9.25% v
Gold GLD 5.47% 6.44% v
US Oil USO 3.04% 1.5% ^
Natural Gas UNG -14.92% -3.18% v

The trend score is defined as the average of 1,4,13,26 and 52 week total returns (including dividend reinvested).

We make the following observations:

  1. Among precious metals, silver has done better than gold. With the stock market hanging tough and the continuous hope of economic recovery, silver’s dual properties (positively correlated to industrial growth and viewed as a close cousin to gold, the hard currency) makes it a better play in the near future.
  2. It is noteworthy that both gold and silver recovered strongly Friday when the S&P 500 (SPY) dropped 1.75%. This is again consistent with our reasoning on the somewhat hedging relationship between gold and the U.S. stock market.
  3. A broad based commodity index ETF (DBC, GSG) is more stable, compared with ETFs representing commodity subclasses such as gold, silver, precious metals (DBP) or agriculture (DBA). It should fit better to portfolios for average investors.

On a separate note, both gold miners ETFs (GDX and GDXJ) closed under their 130-day simple or exponential moving averages on Friday. This, along with GLD weakness, reveals a possible trend change.

Disclosure: I am long DBA, DBC.

The original article is published at http://www.c2ads.net/full-text-rss/makefulltextfeed.php?url=http://seekingalpha.com/sector/gold-precious.xml&format=rss&submit=Create+Feed


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