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A number of investment and gold experts are seeing signs that it is time to take profits and head for the exits on what has been a highly profitable gold trade.

A new CNBC article states "Mark Luschini, chief investment strategist at Janney Montgomery Scott, a broker-dealer with $54 billion in assets, said that on charts, gold is vulnerable for a sharp pullback as it is trading at $400 above its 200-day moving average, a sign of overbuying. "From a purely technical standpoint, I think it'd be wise to take some chips off the table," Luschini said.

One major possible sign of a gold bubble that is ready to burst is the fact that total assets in the gold exchange traded fund (NYSEARCA:GLD) recently became larger than the total assets invested in the S&P 500 ETF (NYSEARCA:SPY). The CNBC article goes on to say "Independent investor Dennis Gartman, who has long been bullish on gold priced in non-U.S. currencies, said he was reducing his long positions on gold priced in euro and sterling terms. "Perhaps things have become a bit too frothy and reduced rather than increased exposure seems reasonable and wise," and "Gartman said gold's rally was not sustainable after SPDR Gold Trust's total assets surpassed that of the SPDR S&P 500 ETF, making GLD the largest exchange-traded fund in the world for the first time."

All investments reach a top sooner or later and with a parabolic run over the past few years, it is increasingly likely that gold could break lower. When cab drivers and TV commercials are touting the genius of gold as an investment like they were touting real estate just before that market collapsed, it makes sense to get cautious and take profits. Those that have high risk tolerances could even short certain gold stocks or buy short ETF's that would benefit on any drop in gold prices. The 200 day moving average for gold is around $1,440 per ounce which means a major correction could take it down another 20% or so. Here are a few ways some investors are playing gold now:

Goldcorp (NYSE:GG) is a gold mining and exploration company, based in Canada. This company has operations in Canada, the United States, Mexico, and Central and South America and produces gold, silver, copper, lead, and zinc. This company is favorite gold stock for many investors and would likely see a large drop whenever gold plunges. If you are bearish on gold this could be a good short.

Here are some key points for GG:

  • Current share price: $49.44
  • The 52 week range is $39.04 to $56.20
  • Earnings estimates for 2011: $2.12 per share
  • Earnings estimates for 2012: $2.83 per share

Yamana Gold (NYSE:AUY) is a gold mining and exploration company, located in Canada. This company has gold exploration projects in Brazil, Chile, Argentina, Mexico, and Colombia. This stock just hit a new 52 week high and could be ripe for a pull back.

Here are some key points for AUY:

  • Current share price: $15.03
  • The 52 week range is $9.78 to $16.18
  • Earnings estimates for 2011: 99 cents per share
  • Earnings estimates for 2012: $1.14 per share

Proshares Ultrashort Gold Shares (NYSEARCA:GLL) is an exchange traded fund that tracks the price of gold bullion as a double short. This is trading near 52 week lows. Gold appears very overbought and is ripe for at least a healthy correction if not a major collapse and if that happens this will go up at about twice the rate of the decline in gold.

Here are some key points for GLL:

  • Current share price: $16.95
  • The 52 week range is $14.77 to $39.32
  • Earnings estimates for 2011: Not applicable
  • Earnings estimates for 2012: Not applicable

Powershares DB Gold Double Short (NYSEARCA:DZZ) is an exchange traded fund that tracks the price of gold bullion as a double short. This is trading near 52 week lows. Gold appears very overbought and is ripe for at least a healthy correction if not a major collapse and if that happens this will go up at about twice the rate of the decline in gold.

Here are some key points for DZZ:

  • Current share price: $4.79
  • The 52 week range is $3.83 to $11.15
  • Earnings estimates for 2011: Not applicable
  • Earnings estimates for 2012: Not applicable

Northgate Minerals, Ltd. (NXG) is a gold mining and exploration company, located in Canada. This company has gold exploration projects in Australia and British. This stock is likely to drop back below $3 on any continued weakness in gold.

Here are some key points for NXG:

  • Current share price: $3.01
  • The 52 week range is $2.41 to $3.54
  • Earnings estimates for 2011: 3 cents per share
  • Earnings estimates for 2012: 17 cents per share

Newmont Mining Corporation (NYSE:NEM) is a gold mining and exploration company, located in Colorado. This company has gold exploration and mining operations in United States, Australia, Peru, Indonesia, Ghana, Canada, New Zealand, and Mexico. This stock is another favorite of gold bugs and it is trading close to the 52 week high. A big drop in gold prices would likely impact this stock and that could make it a good short candidate for gold bears.

Here are some key points for NEM:

  • Current share price: $60.26
  • The 52 week range is $50.05 to $65.50
  • Earnings estimates for 2011: $4.65 per share
  • Earnings estimates for 2012: $4.98 per share

SPDR Gold Shares (GLD) is an exchange traded fund that tracks the price of gold bullion. This is trading at 52 week highs and way above key support levels. Gold appears very overbought and is ripe for at least a healthy correction if not a major collapse. The 50 day moving average is around $158.41 and the 200 day average is around $143.96 so gold could drop quite a bit more before reaching major support levels.

Here are some key points for GLD:

  • Current share price: $171.65
  • The 52 week range is $118.71 to $184.82
  • Earnings estimates for 2011: Not applicable
  • Earnings estimates for 2012: Not applicable

Data is sourced from Yahoo Finance. No guarantees or representations are made. Hawkinvest is not a registered investment advisor and does not provide specific investment advice. The information is for informational purposes only. You should always consult a financial advisor.

Source: 7 Ways To Play The Gold Bubble Burst And Why It Could Drop 20%