David Keller: Gold is Looking Very Good from a Long Term Technical Perspective

David discusses the price action for gold and how it has diverged on the RSI. Throughout July and much of August, there were higher highs and higher lows, and in September, gold pulled back, finally validating that divergence. Overall, the long-term picture for gold looks very constructive, having a multi-year base with the weekly charts continuing to show higher highs. The trend is still in progress, and the challenge is in how you manage the short-term. We are setting up for another run now, and this is an excellent time to accumulate on weakness.

Narratives are helpful when they cause you to think through various possible outcomes. It’s essential to have a plan that will give you some guideposts to follow. If you get stuck in your belief in a particular narrative that can cause you to ignore important information, it’s vital to outline alternative scenarios and always observe how the market is playing out.

He cautions that having too many tools can be a problem, and investors should find an approach that works for them. For David, price, momentum, and moving averages work well.

There is always something surprising, different, or unique in these markets. For 2019, the relative performance of various defensive parts of the equity markets like utilities was surprising. Don’t place equity bets on what you think should do well solely based on the macro picture.

He recommends “Rework” by Jason Fried, which discusses tech startups and argues against having a business plan. He also enjoyed “Plant Your Money Tree” by Michelle Schneider, which examines how to invest in the different phases of equity markets.

Time Stamp References:
0:40 – Thoughts on gold currently.
4:30 – Narratives with gold investing.
7:40 – Technical analysis and experience.
11:20 – Market surprises this year.
14:50 – Interesting books and authors.

Talking Points From This Week’s Episode
• Gold’s performance during 2019 and where we are headed.
• Narratives and how they can affect investor’s thinking.
• Technical analysis techniques and finding what works for you.
• Book recommendations for investors.

David Keller, CMT is President and Chief Strategist at Sierra Alpha Research LLC, a boutique investment research firm focused on managing risk through market awareness. He combines the strengths of technical analysis, behavioral finance, and data visualization to identify investment opportunities and enrich relationships between advisors and clients.

David was previously a Managing Director of Research for Fidelity Investments in Boston, where he managed the Technical Research Department as well as the legendary Fidelity Chart Room. He also co-managed the Business Associate Program, a rotational program for recent undergraduates.

A Past President of the Chartered Market Technician (CMT) Association, David most recently served as a Subject Matter Expert for Behavioral Finance. He is also a member of the American Association of Professional Technical Analysts and the International Federation of Technical Analysts. He has lectured on technical analysis and behavioral finance as an Adjunct Professor at the Brandeis University International Business School in Waltham, Mass.

David was formerly a Technical Analysis Application Specialist with Bloomberg L.P. in New York and was a regular contributor to Bloomberg Markets magazine. He is the editor of the book “Breakthroughs in Technical Analysis: New Thinking from the World’s Top Minds,” published in August 2007 by Bloomberg Press.

David is a classically trained musician and student pilot and resides in Avon, Ohio, with his wife and two children. He received degrees in Music and Psychology from The Ohio State University.

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