The price of gold was back above $1,300 an ounce on Friday, and at the highest level in three months, as money flies into the beaten-down precious metal. Over the last seven weeks the SPDR Gold ETF (NYSE:GLD) is up 11 percent, and is also trading at a new three-month high.
While that may sound encouraging to most investors, the fact remains that GLD is in a downtrend -- and even after the recent rally the ETF is down 20 percent in the last 12 months. The bigger picture shows GLD is down over 30 percent from its 2011 high, as the S&P 500 has rallied 56 percent in that timeframe.
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While investors cannot ignore the movement in gold, the trend is still down and there are two other metals that should be on the radar silver and copper.
>The iShares Silver ETF (NYSE:SLV)was up over four percent Friday to the best level in three months. The breakout is from a two-month long consolidation pattern, that could be the buy signal technicians have been waiting for. As long as SLV can hold above the $19.80 area in the coming days, it would be confirmation that the breakout has legs to run. >The silver mining stocks have had an even better run since its bottom in late December. The Global X Silver Miners ETF (NYSE:SIL) is up 37 percent in the last six weeks, and is trading at a six-month high.
Copper is considered an industrial metal, that is often tied to the Chinese economy. Because a large portion of the demand for copper comes from China, it will move with the news regarding the emerging markets economy and stock market. Trade news out of China earlier this week was well above estimates, andwas seen as a bullish factor for copper going forward.
The Global X Copper Miners ETF (NYSE:COPX) is a basket of 25 mining companies that are located primarily in Canada (42 percent). An increase in the price of copper, and an outlook that has gone from dire to promising, has pushed the ETF higher. The ETF is breaking out of a similar consolidation pattern to SLV and the level to watch for the breakout to be confirmed is $9.50 per share.
The one risk is that the recent rally in every metal, from gold to copper, is simply a bounce off the lows and will be short lived. On the other hand, the charts are starting to improve dramatically -- and if the breakouts are confirmed it could be a signal for investors that the metals have bottomed and are prepared to outperform in the coming months.
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