Gold got slapped around pretty good today — down $19.
As I mentioned last week, I am short Gold for a trade. This was strictly a technical
trading call; I still believe a 10% correction is possible — Gold looked
toppy, and gave several other technical and cyclical sell signals before the crackage.
While I think Gold eventually goes much higher, that is strictly a
product of my macro-economic outlook. This technical break looks significant,
and could see Gold pullback towards support, somewhere between $500-520 (See a
weekly chart for the best view).
A few of you have asked my opinion on how gold stocks might behave relative
to or during a market correction. The short answer is "I don’t know."
The longer answer is that I’ve never analyzed companies relative to the
overall market moves; trying to game the execution of company managements ON TOP
OF tracking the precious metal is too difficult. Its an area where I have no
edge or special feel — and no expertise whatsoever.
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DISCLOSURE: Short GLD
It wasn’t just gold. The energy stocks got hammered, too. The energy ETF VDE was down almost 4%.
Shouldn’t you have a reason to expect every stock in your portfolio to out perform the market. Not that you will be right every time. But otherwise, you should just index.
Yeah right spencer, that index is looking really nice lately. Especially when you factor in inflation.
During the booming stock market of the 80’s we still had the ’87 crash. Similiarly, gold and the other commodoties will have pullbacks. I suggest buying the commodoties on the pullbacks. Looking at the price of gold it had gone up parabolically the last month or so. This is always a bad sign and a pullback was required. I bought a little on today’s pullback and will buy more on future pullbacks. But my favorite commodoty right now are the agricultural products.
Gold has been moving in seasonal patterns much like anything else. The addage ‘Buy in May and go away’ has worked well for gold the last 4 years. Gold usually corrects about now as Xmas season is over. International demand around Xmas goes up as gold is given as gifts in countries such as India.
Today we had one of the largest one day drop in gold over the last 25 years.(down almost $20.00)
Gold has lost it’s luster for now. The next step is probably around the 50 day moving average(537.00)
Excellent call, Barry.
I think Bernanke will have to prove that the US economy can really grow without house prices going up, otherwise gold is going to continue to go up.
Looks like the correction is finally here. The HUI has already fallen 10% from 350 to 315 in a matter of days. 280 is a strong buy imo, as well as gold at $520. I’m still thinking we see $750 this year.