To date, Gold has traded in line with the expectations that I laid out when I made a bearish call on the metal and entered into a "short' position back on July 22
The original post (July 22) and the latest update (Sept5) can be seen here :
On Sept 5th Gold was at $1370 and I suggested that if the $1360 level was breached to the downside we could trade down & test the lows of $1200. That scenario has played out with Gold closing today @ $1268.
That shows a break below another support level that could not hold @ 1273. This now confirms the downturn which has been in place since Dec '12 . Gold is firmly entrenched in a bear market , with the next "test" for those that still own gold set @ $1219 , the July low. Every rally attempt this year has been met with resistance at the descending down trend line.
The 'last stand" the metal will have will be to try & defend the closing low of $1205 and the intraday lows of $1181. Failure at those levels will bring $1000 into play and as I have stated many times the possibility of Gold trading in the "triple digits" before it is over.
If in fact Gold is in a Secular bear market , once the price finds it's resting place there is a good possibility of "flat lining" and underperforming for years..
I have laid out the scenario (in previous blog posts) where Gold will find itself in as the economy recovers and the Fed slows down its asset purchases. That environment will be toxic for Gold and increases the possibility of the worst case scenario that I have mentioned to come to fruition..
Gold is now technically "oversold" so there may be a rally attempt in the next few trading sessions. I believe any rally will now be capped in and around the 1280 - 1300 level..
The DZZ "short" position is up approx. 9% since inception.
Disclosure: I am long DZZ.