Gold is Overbought: Time to Short Barrick?

Currently Gold, trading at a spot price of $896/oz, is 3.3% above its normal trading range. Birinyi Associates classifies it as being "overbought" and while it might not be a sell we would advise clients and readers that they not buy until it returns to the normal range. In a note picked up by Bloomberg yesterday, clients were advised of the situation, and that Barrick Gold (ABX) was an intriguing short opportunity as it was also overbought. Click here for the Bloomberg write-up.

Comments

[Bad Dog:]

What is "normal" about today's market? How can gold be trading outside its "normal" trading range when everything is abnormal?

Jan 27 05:16 PM

[GMiki1:]

Short all the gold stocks I own, too. Please. I look forward to it. Heh heh.

Jan 27 05:59 PM

[gooter:]

i noticed gold traded above it's "normal trading range" on multiple days in Jan., Feb., and March? How is that possible? Shouldn't it stay in it's normal range? What was the recommendation in early Jan. after it's first spot over the range? Also, could you show the "normal trading range for the next 12-24 months?

Jan 27 06:26 PM

[Gold Barron:]

Past performance does not dictate future performance

Jan 27 08:20 PM

[jpeak:]

I hate to say, but this is the classic case of shorts getting killed by playing a position that too many are expecting and whose opponents are numerous and have too much $$ to wipe them out. Go ahead and short it then. But my advice is to short something that where the opposite side of the trade doesn't foam at the mouth.

Jan 27 09:31 PM

[PeteK:]

I don't believe a thing in this article.
We are ready to buy more.

Jan 27 11:11 PM

[Doc 224899:]

"Normal trading range"?

What's "normal" about the price of gold being connected to the major indices when the major indices are in crisis, at precisely the time gold should be appreciating as a safe haven? In fact, international gold buyers are grabbing the stuff like mad, and central banks are holding onto what they've got, while we piddle around with a spot price based on futures options rather than the "real" price in the market.

What's "normal" about gold miner stocks losing value when rising oil prices and rising steel prices drive up the costs of production, but failing to re-gain value when falling oil prices and falling steel prices lower the costs of production?

It is, in fact, "normal" for gold miners stocks to trade above the established "trading range" when the trading range was established during a period of over-corrected share price erosion and over-corrected gold price erosion.

This is not a time to make trading decisions based solely on chart analysis. It is particularly not a time to base trading decisions on one-dimensional chart analysis from material covered in the second lecture of Chartology 101.

Jan 28 08:25 AM

[REX in Florida:]

If they are shorting, I'm buying

Jan 28 08:40 AM

[REX in Florida:]

AUY will triple in 18 months

Jan 28 08:40 AM

[Carl Spackler:]

I like Gold too, but everyone is so bullish. That just tells me that we are do for a little shakeout. The market needs to shake the tree and bring down some weak branches (i.e. investors). We seem like we are in position for a few days down in gold before any advance continues.

Jan 28 11:30 AM

[Keer-eh-Khar:]

BS

Jan 29 03:49 PM

[tb1975:]

Barrick up 6.2% today...how's that shorting going?

Jan 29 09:44 PM

[$$DoLLaR$$:]

i think gold need to correction at least below 850 maybe 800, this conclusion come to me by tecnical analysis in addtion elliitte waves,
if u want more look at the divergence in MACD so its time to sell gold

Feb 10 06:41 PM