Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Gold Price, the Big Money, and My Money

|Includes: DBA, FXE, SPDR Gold Trust ETF (GLD), SLV, USO

Now admittedly being a very small investor/trader I am always open to hear other opinions but having had well over a decade of experience (not necessarily good) I think my views are reasonably well thought out.

Now this knee jerk chant "Buy Gold, the Sky is Falling" hopefully is not being considered as financial advice.  I like most people, do not invest in the anticipation that the world will become a place where all of our institutions are wiped out.  If so, I would be stocking up on beans and bullets NOT gold.

I 've always considered one measure of man 's REAL sentiment is where he puts his money.  In this case, I have a strong bullish position in gold and a much smaller bearish position and I am considering unwinding the bullish position at a loss.  I (like many) still have to deal with the emotional baggage of admitting both that I am wrong AND losing money for it.

Being an option trader, I really don 't need to consider the "Sky is Falling" argument.  That is because the sky is not likely to fall tomorrow.
So let 's look at what REALLY moves markets.
1) the Fed and similar agencies
2) big money
3) and what the MAJORITY of investors BELIEVE to be a sure and REAL thing.

What is specific to the gold markets is inflation.  In this case, there is little American inflation.  If one is trading gold in US dollars, this must be considered.  Where there is REAL inflation is food commodities (#3).  If we follow the big money (#2) they are sellers of gold, as you can observe the slump.  What ever their reason, rightfully or wrongfully, they are currently sellers of gold.  Regardless of the long term thesis on gold, in the short term we have pressure on gold.  Namely (in no specific order)
1)  Republican congress (traditionally defenders of the dollar)
2)  rumours of a (slow) economic recovery
3)  tame inflation
4)  other currencies being WEAKER than the dollar
5)  technical charts

As I write, this my short term thesis is forming itself.  Why I would I consider trading gold considering that at any time the BIG money will decide to trade the long term story on gold rather than the short story.  I as a small short term trader can not when this will happen.  It makes much more sense for me trade the oil story or the food commodity story where the dominant factors are much more apparent.

So, yes, I am going to try to do some damage control and close off my bullish positions in gold.  My bearish positions are so far out of the money there is really no point in closing them, I 'll just keep the profits.  BUT I won 't open more bearish positions as the risk reward with respect to gold volatility just isn 't there.  The problem with the gold story is that the long term outlook is currently being suppressed and there is no way to tell when the inevitable turn around will be.

But we do know that oil will be in the decline now until driving season starts up.  Easy enough to keep your eyes open for a quick melt.  Time to look more carefully at the USO options.  Australia and other agriculture centres have had problems with planting.  Unless we hear of other areas planting, there will BE a food commodity shortage.  That is bullish on DBA.

So yes, definitely for those that are willing to wait for the sky to fall, hoard bullion AND buy a shelter.  I on the other hand expect spring to arrive and people to drive again.  I think they will be buying bread and corn chips.  I know where to trade my money now.