Golden Letdown:

It is almost impossible to talk about the material sector without mentioning Gold. Of course, it has not lived up to its billing of an inflation hedge, and the seasonality chart below displays the weakness in the glittery, precious metal. The GLD may be carving out a double bottom in the 151 area in the last couple of months, but it hardly inspires confidence. The seasonality chart below shows just how weak overall the GLD has been over the last 4-5 years. Notice it has never CLOSED higher than where it started a month more than 60% of the time with the outlier exception of December which has done so 4 of the last 4 years with an average gain of nearly 5%. The fund just completed its fifth consecutive MONTHLY CLOSE lower than where it started in September. October in nearly done and right now it is just one handle below the CLOSE on 9/30. We looked at the MONTHLY chart of the GLD in our weekly note at the beginning of October and it is still in the suggested purchase area. One does have to admit it has been an overall disappointment so be quick to cut losses if the trade does not work out.

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