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The Right Position in Gold for the Short Term

You make an interesting point but rather than enlightening you in something that I may have no clue, I would better ask you if Gold and Silver would escape the crunch (short/medium term) that you referred to, price wise.


On Feb 23 10:46 AM 5142152-337 wrote:

> Excellent article!
>
> I wouldn't buy an EFT, period. I want physical gold and silver and
> am buying as I find it. I would humbly suggest posters give consideration
> to do so as well. Why? Because I am concerned that when it comes
> to crunch time (soon?) that piece of paper will be worth what those
> Barney Frank mortgages are worth! Am I wrong? Would appreciate enlightenment.

The Right Position in Gold for the Short Term

I wrote in my Blog yesterday that the sell short (short term) strategy is a very tempting trade, however at the current level it still places quite some risk due to the strong volatility in the market. Owners of physical Gold have it with a different purpose but the money making strategy (short term) is on paper money and options, either short or long, get in, cash out and buy small quantities of physical Gold, those trades will properly hedge the value of your physical Gold. As bullish as I am, long term, I'm fully aware that the collapse ot the price is gonna leave a lot of people in bad shape, so protect yourself by being open-minded in both sides of the market. In my view, unless techically the price leaves a massive doble top at USD 1030, Gold will still be a buy between USD 780 and USD 850, if weren't to break USD 1.030 this quarter.

Gold: The Only Remaining Bubble?

Inflation wise it appears that Gold is a leading indicator of inflation to come, not a lagging indicator, so that what the price of Gold may indicate is that there is an increasing expectation for inflation to get out of control in the future. The safe heaven theory is what creates bubbles in the Gold Market. The safe heaven interpretation, in my view, is that real money, goes to hard, liquid, assets temporarily while there is no safe investments out there to put your money in. Now when it comes to use it as a store of value and a hedge against loss of purchasing power then the market is real, it's not a bubble, Gold has been repriced long term and the USD 250 - USD 550 range is a thing of the past. USD 550 - USD 1.000 is the new trading band at may take 2 attempts (on a quartely basis) to break USD 1.030 in order to reprice it once again between USD 1.000 - USD 2.000 on a long term perspective. it's my personal view on it.

Could There Be a Real Breakout in Gold?

It may be, but let it work down to the 830/850 level before riding the wave. The analysis is well done but the buy on dips confirmation is needed and that will happen in the 850 area, actually in the event of a sell-off from 900 down to 830 and then a quick rebound from the 830 level straight through the 850 level would the perfect setup for the next run to 1.000. If the 830 level is penetrated once more on a closing basis then hold your horses, however if it holds then at least the first 2Qs of 2009 can provide a good return in your Gold investment. Long Term Charts (Yearly, Quarterly and Monthly) likely support the idea of a bull run from mid February onwards. Good job.