GLD Watch

Larry Kudlow thinks the "soaring" price of gold is in response to President Obama's pitching of Medicare rebates yesterday ("budget busting benefits for the elderly"), or maybe Treasury's projections of huge increases in the U.S. debt by 2015.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
GLD $119.68

The only problem is, near-term gold has been dropping, not soaring, the last three days, which is the timeframe of Kudlow's news surprises.

And long term, gold has been rising since 2005, long before the "budget busting" bailouts intended to keep the economy from collapse.

It makes you wonder. Can Kudlow read charts? Has Kudlow read Keynes?

So, let's look at the exchange-traded fund that tracks gold (GLD). It's the easiest way around to trade and hold the metal.

GLD has declined 3% from the $122.45 high set on Tuesday. The price has been fluctuating sideways since early May, between the $122+ level and about $115. This is not a price that's running away, to the upside or the downside.

Reversal Levels

• $122.45, +2.3%
• $119.68 <== You are here.
• $117.05, -2.2%

Longer-term, GLD hit a swing low of $41.02 in February 2005. From that point is rose steadily to $100.44 in March 2008. Declined as the government bailouts kicked in, reaching a low of $66 in October 2008, and then began a fairly steady rise to $122.45 on June 8, this week.

So, a 30-second glance at the charts shows that Kudlow's analysis lacks all merit and has nothing to do with underlying reality.

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Disclaimer

Tim Bovee, Private Trader tracks the trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment. No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

Abbreviations:

• psar - Parabolic Stop and Reverse
• adx - Average Directional Index
• pps - Person's Proprietary Signal
• ma20 - 20-day moving average
• macd - Moving Average Convergence-Divergence
• sto - Fast Stochastic

About the glance: The colors indicate the state of each signal.

• trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways
• adx: orange for above 30-up, blue for 20-down, purple for in the middle. Red is most prone to whipsaws
• psar, pps, macd: green for bull mode, red for bear
• sto: green for overbought, red for oversold, yellow for the neutral zone.