The Market Vectors Gold Miners ETF was trading up strongly on Tuesday morning as the worst of the gold crash appeared to be over for the time being. Gold prices appeared to level off on Tuesday morning, though it’s not clear how long the lull is going to last.
The massive sell off in gold has paused on Tuesday, but that doesn’t mean that it’s over. Wall Street, and traders across the world, are trying to price in the changes in the market in order to figure out whether this is the low, or if there’s more pain to be had for those holding the metal, or ETFs connected with it.
Gold bounces back
At time of writing the Market Vectors Gold Miners ETF was up by 1.53 percent to $13.97.The price of gold rose by about 0.2 percent in early trading this morning. That rise won’t bring back much of the loss of recent days, but it does bode well for traders worried that the price of the metal could fall even further.
The ETF, which follows an index of gold mining firm shares, had lost more than 25 percent of its value for the year so far, through Monday’s close. The crash in gold in recent days drove the value of the ETF down by more than 17 percent in the last five days alone.
Jim Cramer said last Friday that he thinks keeping about 10 percent of your portfolio in gold is a good idea. for anybody that took his advice right away that turned out to be a very bad decision, but gold might be a good idea in the long term, at least after it hits its bottom.
Trying to find the bottom in gold
Jesse Colombo, who writes at the Forbes contributor network, saw the fall in gold coming. He published a technical report on Sunday that identified a pattern of trading in the yellow metal and called for traders to get out of the market, or short it, in order to make the best of a bad climate.
Colombo says that “$1,000 is the most immediate support level and is significant because it is a major round number and was also an important resistance level in 2008 and 2009.” He reckons if gold breaks that level, which it turned away from on Tuesday, it could fall to its next technical support level at $700.
He says that the bubble in gold was spurred by loose money across the world, but reckons that the crash in gold means a good value long term investment. Colombo still isn’t sure that the end of the gold crash has arrived and he, like many other traders, will be waiting and watching in order to find the true bottom in the market.
The Market Vectors Gold Miners ETF might be a good bet once that bottom has been reached, but today’s rise doesn’t mean we’ve hit there just yet.