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Robert Duval
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Professional Independent Trader, 15 years. Started as a equity index futures floor trader, now day and swing trade, stocks, treasury futures, index futures and commodities. Believe in correlation of markets, must undertand all markets to trade one well. (aka Jim Rogers) Self taught by... More
  • A Secular Reason To Short Gold  4 comments
    Apr 15, 2014 8:50 AM | about stocks: GLD

    Very Busy this morning; this will be a very short post; so I will edit and re-post this later with further color.

    UPDATE APRIL 29. Only short now very small via long dated puts.

    GOLD HAS maintained support above 1280. I am neutral on GOLD until sustained trade below 1280.

    Gold (June Futures) have broken down below 1300, nominally on a Wall Street Journal Article highlighting slowing Chinese and Asian demand for physical gold.

    Normally I would put little stock in such articles; however for some time I have seen the gold trade as a great short setting up, in search of an obvious catalyst. This is it, and gives folks "cover" to unload their gold exposure.

    Other reasons for Shorting Gold:

    1. A steadily; if slowly to this point improving US economy;

    2. Anticipation of more pro - growth fiscal policy down the road, higher Capex spending, and associated higher real interest rates;

    3. Lack of bullish reaction -- which I define as failing to rally to the March highs near $1400 -- in spite of multiple catalysts:

    --A sharp Nasdaq and Small Cap Selloff,

    --A large risk off rally in US Treasuries (positively correlated to Gold)

    --Substantial geopolitical turmoil in the Ukraine.

    4. (most important of all) Latent popularity among average investors in Gold as a primary investment. It is my continuing sense, that Gold is simply too popular among the "crowd". Among my non - professional investor friends, it is the Only asset class, still asked about.

    Summary -- I see Gold as an extremely high risk investment; with risk to the December lows below 1200, and possibly much lower in time.

    (click to enlarge)

    GLD data by YCharts

    Short Gold.

    Disclosure: I am short GLD.

    Additional disclosure: Short Gold via Futures. This is not remotely advice. Consult your advisor.

    Themes: Gold Stocks: GLD
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Comments (4)
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  • CoinsK
    , contributor
    Comments (2739) | Send Message
    I sold Friday and will be back long tomorrow. I wait for a drop after I sell and then buy again. Rinse and repeat.
    15 Apr, 03:10 PM Reply Like
  • Robert Duval
    , contributor
    Comments (2919) | Send Message
    Author’s reply » Hmm. I'm doing that but with the Nasdaq.
    15 Apr, 03:37 PM Reply Like
  • CoinsK
    , contributor
    Comments (2739) | Send Message
    A good strategy is a good strategy regardless Macro :)
    15 Apr, 03:41 PM Reply Like
  • Robert Duval
    , contributor
    Comments (2919) | Send Message
    Author’s reply » To add 2 more points to the above;


    5. Lower US budget Deficits,


    6. De-escalation of Ukraine tensions.
    18 Apr, 12:13 PM Reply Like
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