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Gold Top Review and Outlook

September 8, 2011 1:26 pm 1:26 pm / by / 2 comments

I follow the precious metals market closely, both out of general interest and for the ever-enticing trade opportunities the group may present.

Here is a quick recap / prediction come true, much to my chagrin actually, because I like seeing gold move up.

 

<— How I feel when gold moves steadily up.

 

 

From early July to mid/late August, gold began a move that was a little too sharp to the upside for comfort.

That night, Jake reported he had wisely divested himself of 70% of his paper Gold holdings intraday. I definitely agreed with that analysis, and set my stop under the daily low, which was hit the next day.  I sold all my IRA gold at 181.50ish (I bought ~130).

I had two comments in his blog

Comment 1:

great post.

I grudgingly concur bec every time Gold has become this…momentous it has pulled back for at least 6 months. I do loves gold though, a lot. Obviously the trend is still higher in the LT sense, maybe 2000 is the big round number that ends it. Maybe, chavez was a magazine cover indicator. But yeah, at least a pullback soonish, it seems (perhaps to coincide with equity bounce?)

Here is that “momentous” chart I was referring to.  Just a simple 50 day percent change on a weekly chart as a guide:

The call though that I am most satisfied with is this one however, in comment two:

Comment 2:

indeed.

also watching for possible “silver” top where we set some high here, pullback sharply, break that high, take out that low. The ol’ 1-2 false breakout a roo.

 

So far, that’s been the approximate case.

Silver had a much steeper ascent and resultant sell-off. Also, the ol’ fake breakout happened over 5 days, not two weeks.  And, until 1750 is broken, we haven’t decidedly made a lower high/lower low that would constitute a downtrend.

So what’s next?

– I still believe that the POG can correct sideways for several more months.

– The PRIMARY fundamental driver of the PoG is rates < 2%.

– The SECONDARY fundamental driver of the PoG central banks aren’t leasing it.

As long as these conditions remains true, the fundamental backdrop for gold is still bullish

 

 

2 Comments

  1. AS says:

    Great post, Danny.

    Rate of change can be a great indicator of extremes at many times.

    Are you considering buying GLD puts? Or would you prefer just to stay in cash until gold sets up again some months from now?

    Thanks.

  2. thewife says:

    Nice post. Golden! ;~)