A reader question looks for an opinion as to the gap in July. First of all we know all the market mythology about gaps and their being closed and such.  By and large we ignore it and focus on the immediate context.  Sometimes closing the gap is very important. Sometimes it is irrelevant.   What is relevant here is that GLD is in a short term downtrend in a medium term sideways to downtrend.  These interludes in the bull market often last for months and are designed to discourage the easily discouraged.  We are of two minds, if not more.  One to ignore it and stay long (in spite of our analyst discipline).  The other is to start bailing out when the trend shows signs of topping and trying to get back in lower down.  It can try the patience.   Perverse bugger.

Right now it is as can be seen right on the trendline from 2005.  We would not be adverse to buying some here (not a lot) with a stop two or three % under the September low.  Several considerations weigh on us –the present markets are out of their minds, and the dollar is  in what looks to be a strong uptrend.  As they are negatively correlated we should expect gold down while dollar up.  These markets are being punished by hedge fund and institutional selling.  When that lets up the true trend should assert itself.

A year of GLD showing huge backing and filling and consolidation.  Do we think the party is over?  Probably not.  But we will be returning to the drawing board and consulting our crystal ball and reporting further on our long term guesstimate.