The Gold Bugs Are Sweating
The Gold Bugs Are Sweating
The gold bugs are getting a bit nervous – and who could blame them? We lost 70 handles since the 1432.5 top and things are starting to look a bit toppy here. Although many are clearly in it for the long haul the more speculative members of the species may be ready to head for the hills until grass is starting to look green again. Is this the end of the ‘endless summer’ for the gold bugs?
Having traded prescious metals for longer than I care to admit I am of course a bit more cynical. My position has been that this is a great setup for bilateral shake out and I’m sure market makers would be happy to oblige. Nothing I have seen in the past few days yet leads me to change that outlook. So here’s what I see on the horizon:
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What I’m seeing here is a sideways retracement. Obviously we don’t want to be biased (as Scott keeps pointing out) as this could still turn into some real downside. So, my alert threshold would be around the 1340 mark – a floor needs to be found at 1314 or things could rapidly accelerate to the downside and seriously squeeze the pigs.
If you intent to play things to the upside that’s the support cluster you want to keep in mind. Also, bear in mind that gold trades 24×7 these days, so you may want to stay away from options or ETFs and instead sell GC or ZG instead. You don’t want to get up one morning and find your stop turning market 30 handles below your limit. You have been warned – I can tell you stories about trying to close GC positions and getting filled 30 minutes after – at a horrible bid.
Anyway, thus far I still have an inkling that 1314 will most likely hold throughout January. We may churn sideways for a while and perhaps even paint new highs. Things should get a bit more interesting for the gold bears in February. In the interim the current bubble environment should be good for at least another short squeeze. Well, that’s my story and I’m sticking with it until proven wrong 😉
Cheers,
Mole
[/amprotect]P.S.: Sorry for posting this late. It actually wasn’t my server – RoadRunner suddenly had some weird routing problem and I lost my entire post. Had to write it all over again, which as you can imagine sucks.
