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Is it Time to Sell Gold? by Simit Patel

That's what some folks are saying. Here's what Rick Ackerman says:

How far might gold conceivably fall over the next few weeks? As far as boredom dares to push it, we’d guess. However, we see no real urgency in the selling right now, only a tendency by some investors to lighten up out of impatience. Nor is it gold’s recalcitrance per se has tested investors’ patience; rather, many have grown bored with the bear rally in stocks that has temporarily sucked the life from the precious metals sector. For, as long as stocks remain buoyant, it will tend to distract investors from the gathering financial storm that seems destined to push precious-metal quotes to new all-time highs. For your information, and no matter how bored investors become, we doubt that August gold could go much lower than 882 over the near term. And even if it did, the long-term charts would remain a picture of health all the way down to 810.
Graham Summers offers a contrarian argument:

Gold investment schemes (based on inflationary fears) are all over the radio and TV today. G. Gordon Liddy, a man who masterminded Nixon’s break-in of the Watergate hotel, can be seen on television crumpling up dollar bills and telling investors to “buy gold.”

When a crook of Liddy’s caliber appears as a spokesperson warning you not to trust the government and to diversify away from the dollar… then you know things are beginning to get out of control. It would be one thing if only a small handful or professional investors were warning about this (as was the case with the housing collapse and financial crisis). But inflation concerns are now common amongst even non-investors.
I think some of these points are valid, and so if you're a short-term swing trader comfortable shorting gold, there may be some technical patterns lining up that you'll find compelling. Personally, the case for a bull market in gold is just too strong, so I'll continue to accumulate. I don't see myself changing my opinion unless the market sustains a break below 750, which I find unlikely.

See my previous article on how to create a diversified gold portfolio.

Simit Patel

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