Gold Is Looking Good

Gold has been on the move lately thanks to a weak dollar, but yesterday we had a move that did not coincide with the dollar's weakness. The dollar remained relatively flat as gold added another $8.80 to close about $969 which has been a fantastic 2 day run.

I would wait for a pullback before opening a new position as there may be some near-term weakness in the price if the dollar firms here. I expect the dollar to continue its weakness moving forward which will be good for the yellow metal and I was very pleased with the flat nature of the DXY today and the upward price of all the precious metals. I am a long-term gold bull and think there is significant upside espcially if it can break and hold about the magical $1,000 level.

If the dollar continued its slide overnight, which it looks like it will, then today could be a very interesting day. The fundamentals do look good for gold as production is down and demand is up. If China is in recovery mode then that will put continued pressure on supply as well and if the US does recover this year, which I do not believe will happen, but I could be wrong, then there very well could be a strong move to the upside. It is also important to note that summertime usually provides a good buying opportunity as the price is depressed while in the fall we usually see price appreciation.

Either way, I like it, but would wait for a pullback before pulling the trigger (click to enlarge).

Disclosure: I am long the GLD, SLV ETFs

Comments

[Carl Martin:]

Where's the beef!

Aug 05 10:22 AM

[Zoltan L. K...:]

This formation for Gold is not about a pullback. Should there be one, then wait some more. My guess is moving upwards.

Aug 05 11:06 AM

[Anthony Alfidi:]

Buy gold on the macro fundamentals: insane monetary expansion and unfundable government liabilities.

Aug 05 12:30 PM

[AndrewBaker:]

Whilst all commodities are doing well, partly due to a weak and weakening dollar, gold is the one that will give one of the biggest paybacks going forward. Given too that there are some big players out there trying to keep the price down, it's done creditably well recently, and will spring upwards far more quickly in time when the shorters have had to pull out.

Buy now, and on any dips. You'll not regret it, and will have a great hedge against the dollar's further falls and the inflation that must happen at some point with all the fiat money pumped into the system; and don't forget, the government wants inflation to eat away some of the colossal debt it and we now all have, so it won;t do much to try and stop it when it starts.

Disclosure: I'm long gold.

Aug 05 12:34 PM

[heartky:]

How much of a pullback are you waiting for?

Aug 05 01:50 PM

[heartky:]

How much of a dip would concern you?


On Aug 05 12:34 PM AndrewBaker wrote:

> Whilst all commodities are doing well, partly due to a weak and weakening
> dollar, gold is the one that will give one of the biggest paybacks
> going forward. Given too that there are some big players out there
> trying to keep the price down, it's done creditably well recently,
> and will spring upwards far more quickly in time when the shorters
> have had to pull out.
>
> Buy now, and on any dips. You'll not regret it, and will have a great
> hedge against the dollar's further falls and the inflation that must
> happen at some point with all the fiat money pumped into the system;
> and don't forget, the government wants inflation to eat away some
> of the colossal debt it and we now all have, so it won;t do much
> to try and stop it when it starts.
>
> Disclosure: I'm long gold.

Aug 05 02:05 PM

[Jake2:]

Nice cautionary tale but "pull back" and "dip" are almost never defned by analysts. One man's "pull back" may be another man's insignificant "blip" on the radar screen, or trend line, as it were.

Aug 05 02:14 PM

[Editrice:]

I would appreciate knowing your answers to heartky's questions, Ray.

Aug 05 02:57 PM

[Ray:]

Sorry for the delay. I like it here, but think if you can get in between the $950-961 would be ideal. Lower would be better as long as nothing in the fundamentals or dollar has changed. Entry point is always subjective so if you want in the do the 1/3, 1/3, 1/3 method. By a third now, buy another third in a week and hold the final third for a dip or the end of August.

Aug 05 05:22 PM

[Old Trader:]

Fwiw,
I believe its Market Folly who follows various hedge fund portfolios, posting their holdings/changes, and some very serious players in that space (think Paulsen, the guy who made a couple of billion, shorting subprime mortgages a last year, among others) have been piling into gold, both physical, as well as ETFs. I've read the same thing on Bloomberg, over the last month, or so.

Disclosure: Long GG

Aug 05 07:05 PM