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The End of Gold, Part Three

Patience is the only valuable virtue of every investor, I dump my Gold this morning at the European open and see what happened. Needless to say what USD 930 / 920 means now, a terrific suport for the subsequent run up to my former USD 1.200 limit price. Well that't how it works.

The End of Gold

The play with Gold still has a significant speculative component, personally I don't think that being extremely bullish nor being extremely bearish, short term, would actually pay off as investment, the proper setup is to be adaptative withint the almost 1 year long consolidation range. Now if I was to adopt a bullish instance, I would play it with the changes in the EUR/USD, the undeniable relationship between these two assets favors Gold for 2009, but people will tend to make the same mistake over and over again short term, which is buying the break of 900 only to see it come down to the 700/800 area. Exercise patient, do not rush into buying or selling in distress markets, wait for Feb 15 to see what the range was for the first 1 1/2 months of 2009 and then buy. The time to be extremely bearish has passed and a tiny bullish attitude may be coming. GOLD/(EUR/USD) ratio stands at 697 which is the highest since Gold was at USD 1.000, and suggests there is a preference for Gold, but it does not mean, in no way, that Gold will skyrocket in a month. From the demand/supply standpoint, production cost is coming down which makes B/E for producers lower and Governments are in no hurry to fill their safes with Gold, not quite yet. There is a lot more going on the Stock Markets, Bonds, Safe Havens and so forth and it is what Governments want the Gold Price to be. Also remember that Gold left a lot of traders (not investors) wondering last year why Gold did not work in their benefit, quite simple August was the time to be bearish and I said it back in August, and everyone was buying at the high 800 level following analysts recommendations, what a shame, those losing plays are not coming back to the market right now, they will eventually if they did not lose all their cash, meantime trust yourself, your market sentiment if it's proven right within the last 6 months and follow the short tem trend whether it is up or down, if Gold was to go higher, well a consistent break over USD 1.000 with a depreciating USD will make the trick. Disclosure: I don't have any market position in Gold at the moment nor do I own physical Gold.

SPDR GLD ETF Unloads 79 Tons of Gold - Should Investors Follow Suit?

Don't get rude guys, everyone is right, just sell now and buy back in a weeks when physical demand from India and China come back and that would help stablished a real bottom but al least USD 60 lower than where it is now, remember that techically gold is one of the few assets, if not the only one which has not completed the 100% retracement from Sep last year, so there is a case for bears and bulls, just time the market correctly and both short-term bears and medium term bullish will be al happy

SPDR GLD ETF Unloads 79 Tons of Gold - Should Investors Follow Suit?

Bottom lines everyone is somehow right in their views, my message basically goes to thos who buy Gold based on what they read on always bullish technical/fundamental reports. If you still want to be a bull then sell now and buy back at the 50% retracement of the move down from 750 any where it goes (i.e. 660, 500 or else) when that retracement be reached then the upward trend can be relied upon. Meantime there is gonna so may twist and turns in price and speculative forecast from those who don't the real money. Owen made a point as to how ETFs work, but it doesn't change the bearish trend with not identifiable bottom yet!!

SPDR GLD ETF Unloads 79 Tons of Gold - Should Investors Follow Suit?

I agree with Chris, a change in mindset is required, hopefully for individual traders like me the market is going to go back to those tranquil days when we where able to make USD 2.000 / day just by using a large stop. If you made good money over the last 3 years keep it safe and make up for those sleepless nights by have a wonderful vacation, in the mean time the trend is your friend and the upcoming low volatility your live insurance. Don't mess with the past, it is just that the past.

SPDR GLD ETF Unloads 79 Tons of Gold - Should Investors Follow Suit?

Finally a Gold bug accepts that the Gold scenario have change severely in the overall environment, it's not that Gold isn't worth its price, it is that major holders of Gold nowadays are Funds, Investments Bank and ETF, it they don't sell at times where the price of the dollar, the inflation outlook and the overall sentiment is recessive, then their profit is going to dissapear forever, dont' trade spot trade short funds like DB, noone ever would like to hold a losing asset unless it is properly hedge but how can you hedge holdings of physical Gold? probably by selling paper Gold which makes the case even stronger. Watch out for analysts recommending you to buy without looking at the big picture, they may be angry for the so called free market (a manipulated one) but the fact is that you want to make money regardless who is mad of the market and who is not, madness comes as a natural reaction to huge losses in a very challenging environmet like this. On top of this, losing investments bank now have to grab their well built up commodity wealth while it last, it is the one of the few liquid assets that can provide cash when they are going broke