$666 - the Number of the Beast?

1. I have been of the opinion for a while now that Gold is in a very wide and broad consolidation after the huge run up in late 2005 / early 2006. This means that I do not believe that we are going to significantly surpass the most recent relative high of $725 and in fact we may not even reach $700. The action today is illustrative of my point. Gold has broken out to $666 (nice number eh?) on a day when the IAEA suspended half the aid that it provides to Iran, and the HUI is up a measly 1.2% right now. This kind of underperfromance has been endemic throughout the recent move in Gold and I think it is a very strong indicator that this move isn't going to go anywhere particularly significant and that we're likely to retest lows at some point, before the broad consolidation can be termed finished. Very significant negative divergence with the miners. This is what happened during large portions of 2004 and 2005 when gold stocks failed to go anywhere.

In any case, I believe that $680 should cap the current move in the short term, and I expect that the underperformance of the miners will continue until then.

2. Looking at the miners, one that has recently really stood out has been GSS, though it now appears to be going quite vertical. KBX is dead in the water at under $1.70, which was around the Amex IPO price which has now become a major point of resistance. Once Gold takes a dip, I would fully expect KBX to resume its slide and retest possibly the $1.40 that was the low of the recent crash.

3. Interesting announcement: from today, GLD will begin trading at 8:20am EST, rather than at 9:30am as other stocks. "The earlier opening will allow investors to start trading streetTRACKS Gold Shares (GLD Shares) at the same time that trading in COMEX® gold futures and gold options commences at the New York Mercantile Exchange Inc."