Thursday, October 9, 2008

IS GOLD READY TO SKYROCKET?


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Posted by John C. Lee at 10/09/2008 11:04:00 PM
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5 comments:

Anonymous said...

Are you trading GLD at all?

October 10, 2008 at 12:04 AM
John C. Lee said...

no. I'll only consider it if it breaks above $13.50 and past the 50-day MA.

October 10, 2008 at 12:07 AM
Larry Arndt said...

I'm absolutely bearish gold.... it's lagging the commodities sell-off and is on the receiving end of fear buying... I am taking a little bit of heat on this trade however my outlook is to capture a nice chunk of the gold breakdown so my time-frame is a little different.... I'm not swing trading gold.... I want to ride it down the other side of the hill....

we'll see what happens... there is still the possibility that I will need to cover due to unforeseen circumstances... FED cuts not being a concern....in my opinion...

this is probably the most unpopular trade I've made in a while... everyone calling for a mistake on my part.... time will tell.

October 10, 2008 at 12:31 AM
Anonymous said...

But with fed cutting rate(another 50 point could be coming) and 700 Billion bail out. The only reason the dollar traded sideways is because Euro is having problems of it's own otherwise you would have seen GOLD reaching 1k already.

Tradermarketinfo-

October 10, 2008 at 3:34 AM
Larry Arndt said...

Like I said before, I'm not worried about the inflationary expectations that some might have with coordinated rate cuts.... to me that signals major deflationary headwinds as opposed to a standard run-of-the-mill inflationary monetary stimulus...

The dollar trades against a basket of currencies and is just starting to ramp up for a major bull run... US dollars are in very short supply as institutions liquidate and seek refuge in US dollars and yielding dollar denominated assets... not gold.

The euro has little to do with how or why the dollar is behaving the way that it is... I will be surprised if the Eurodollar and the European Union survive this downturn in their current form. If you are referring to the Euro/US spot pair you'll have to be more clear with your explanation.

Gold has already hit 1000+ earlier this year in March...the commodities cycle is out of favor and can only exist in a strong global economy or in an environment where sentiment favors strong growth... neither of these conditions exist anymore... Gold is still artificially high from the previous gold producer price support seen four weeks ago and most importantly retail fear buying on ungrounded expectations of rampant hyper-inflation...

We are headed for a major slowdown as the equity market prices signal real economy conditions several months into the future... a rate cut stimulus will be a welcomed remedy to wealth destruction as opposed to an inflationary problem...

From a technical perspective.... Gold is struggling at a confluence of two critical technical levels and supply appears to have reentered in the form of producer hedging... based on this I expect the "relative strength" of gold compared to the broader market to disappear and I expect gold to continue its move downward before the month is out...

The only concern I have at this point is with a geopolitical exogenous shock for example the bombing of Iran or a major declaration of war... if this occurs I will cover and potentially switch my position...I will also cover if gold does not retreat from these level in the next several weeks and/or begins to show genuine strength...

That's my opinion.

October 10, 2008 at 8:38 AM

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