The gold bulls are running stronger than ever, but are they running toward a precipice? Many think not, if you happen across FOX News on a commercial break you'll discover gold is going to $2000 per ounce, you can even get a free DVD in the mail to find out how to buy your physical gold! Come to think of it, I haven't seen any gold bull commercials other than on Fox--go figure.
I've entitled this blog entry "Twenty-four Dollars" because that's about how far the gold market is from hitting the psychological $1500/ounce barrier. The question is, are there enough $2000 believers to start liquidating profit takers out of the market? I believe there are enough of these people to make at least a few gold bulls very happy.
The bursting of the gold bubble is a tricky trade because it's all about the technicals and timing. The inefficiency I'm looking to exploit is the liquidity crisis that will emerge...eventually. The danger is that I time the trade wrong.
I maintain my belief that the emerging hawkishness in The Fed will be the pin that pops the gold bubble, now that we are nearing that $1500 mile marker I believe it's time to begin averaging into the trade--but slowly and cautiously. I've readjusted my prices to a small degree and will initiate a position @ $1525.00, adding more as prices wash above this price. These record high prices should begin inducing some selling. We'll see, wish me luck!
1 comment:
An excellent post. Gold is definitely a bubble and I'll probably short it too, but not until it falls 15-20% of it's highs. I'd make more if I could call the top, but I can't...
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