3 Signs Pointing To A Bottom In Gold

Sign 1: Gold vs the S&P500

Adam Hamilton explains that the Fed induced stock market buying frenzy in the S&P 500 stockindex (SPX) closed at new nominal record highs in 69 out of 252 trading days in 2013.  With the SPX melting up so relentlessly, stock investors aggressively dumped their gold in the form of GLD-ETF shares to shift that capital into general stocks.

 Sign 2: Gold vs the GLD

Adam Hamilton explains how the SPX melt-up drove investor away from gold, in particular the GLD ETF, which in turn drives gold prices lower through the physicalgold selling of the ETF.

 Sign 3: Gold futures

The pressure on the gold price, driven by GLD ETF selling, resulted in futures speculators dumping the precious metal aggressively.It became a vicious circle from which gold has not recovered yet.

DYI Comments:  No doubt gold and their mining companies share prices have taken a tumble.  The miners from peak to trough dropped 50% to 65% which has sucked out the speculators.  Gold and its mining companies continue to have room to run before this asset category has been played out with the Dow/Gold Index below 5 to 1 (or more).  However since the easy money is now over DYI's model portfolio has the miners at 25% and as the Dow/Gold Index continues to drop (higher gold prices) I will clip my exposure. It is a good time to dollar cost average into your favorite gold mining mutual fund.

Dow/Gold Index 12.41

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 01/1/14

Active Allocation Bands 10% to 60%

45% - Cash -Short Term Bond Index - VGPMX

25% -Gold- Precious Metals & Mining - VBIRX

20% -Lt. Bonds- Long Term Bond Index - VBLTX

10% -Stocks- Equity Income Fund - VEIPX

[See Disclaimer]

DYI