Breaking Trend

Gold is finally bucking an important and, for gold investors, a stressful trend. That trend is how gold has tracked and followed the general stock market.

I spoke of a couple important items in previous posts. The first is how I believe that the stock market is in a secular bear market, and the other is how it will be important for gold to break free from its ties to the stock market.

Historically, gold performs quite well when the stock market performs poorly. It is obvious that eventually this trend of gold following the stock market would eventually be broken, but the real question was when.

I was starting to get the notion that just that had occurred, but I didn't want to be premature with my claim. I got the idea that when the stock market had a decline that ran 4 consecutive days. During that period, gold rose approximately $10 /oz.

After today's action in the markets I am finally willing to make the claim that the trend is broken and gold is gearing up for a strong vertical move. Today the DOW rose a clean 128 points, while gold lost a few bucks.

I think that this notion is trivial in the long run, but interesting enough in the short run. It is nothing more than a sign that gold is ready to go, and so am I.