Technical Read: GLD moved to levels not seen since mid-April. This price breakout indicates the trading uptrend is still in place and puts our 6/27 buy signal in positive territory one day after the call.
What is next? The current conflict in the Mid-East is very supportive for gold, and it is not likely to end soon. The Iraqi central government seems be unable to best its ISIS foes. Bagdad’s two best options for help are the US and Iran. Both options are flawed. Post-Obama’s election, US policy has carefully cultivated a theme of exiting Iraq. Iran is the other side of the coin. If they establish a foothold, Tehran may not be too keen to leave (gray hairs will remember the Soviet Union’s reluctance to leave Eastern Europe after WWII). The government in Baghdad has a grim future.
It will take a lot of stomach for gold bears to aggressively sell off the yellow metal against a back drop of 24 hour cable news featuring violence in Iraq. This is especially true if the government in Bagdad appears to be failing the stability test. — GHG