Gold is on The Edge

I want to examine the Gold market today but I will only be using the LAWG Model which is a technical math based model.  Why is that you ask? You see in my opinion Gold is truly a strange commodity.  What is the major industrial use for gold?   Other than reflecting demand for jewelry or the East Indian wedding season it is hard to come up with a major industrial use for Gold.  It is my opinion that the main reason for a Gold Market is to measure geopolitical or economic anxiety.  In present day markets it seems that it takes a much larger world or economic event(s) to impact the market than in the distant past.  So given those opinions I choose to strictly use the LAWG Model.  So let us go there and see why Gold Is On the Edge.

What is actually known according to the LAWG Model?

  • Gold is in a down trend
  • Gold will reverse to bullish on a close this Friday at or above $1259.00
  • Gold closed last Friday (5/19) at $1253.60
  • Gold is presently trading at $1259.90 (market is open as I am writing this)
  • 200 Day Simple Moving Average is $1244.80
  • 200 Day Exponential Moving Average is $1254.40
  • Should Gold fail to turn Bullish on Friday it will become more difficult (not impossible) to reverse the trend over the next six weeks

So what is the LAWG game plan?  LAWG is simply a model to measure likelihood.  Since nothing is 100% when measuring likelihood one is also measuring lack of likelihood, and this is important to realize.  With this in mind it has been my experience that when a commodity, any commodity, approaches levels of trend reversals (bullish or bearish) it is more likely that the present underlying trend will prevail.  Once the underlying trend is confirmed (failure to reverse trend) it is my opinion that the commodity in question will likely experience a significant move in the direction of the underlying trend.

With all this in mind I am suggesting one look for levels to sell August Gold going into weeks end knowing that a close at or above $1259 will negate this plan.

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Lee Gaus

International Futures Group


The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results.