Is It Too Late to Buy Gold?
Written by Sidney on November 24, 2009
The price of gold has had a massive run-up of approximately 74% since bottoming out in Oct 2008. This run-up was due to many reasons, from the decline of the dollar to inflation fears. We first highlighted the potential of this precious metal on our Sep 4 post, but if you had not initiated a long position then using the Gold ETF (GLD), is it too late to buy now?
From the log chart of GLD below, it is obvious that the price of GLD is reaching a climax soon as it accelerates up in this parabolic fashion. Prices are always mean-reverting, which means to say that the price will, at some point, drop back to its moving average support line. In our case, we are looking at the 50-day exponential moving average because it has been a very strong support for GLD over the past one year.
Technical Analysis of GLD
In conclusion, we do not recommend buying GLD now as the price of gold is currently overstretched. We prefer to wait for the price to revert to its 50-day exponential moving average before moving in.
Good luck trading! 
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