So far gold has recovered about $11 from the 795 low this afternoon and silver about $0.20 as well. Today's attack on gold was likely intended to shakeout as many longs as possible imo. There is very strong possibility that prices breakout right from this level. Let's see how the week closes but my guess right now is that we will still see a positive weekly close on both gold and silver and this is really all that matters in the near term...
Today's coordinated action by the Fed, BOE, BOC, SNB and the ECB is too provide a much larger pool of liquidity to the banking system. This is a highly inflationary development alongside with the release that US import prices have risen the largest in 17yrs. It's no wonder that gold and silver quickly rebounded and are now trading positive on the day. For those that understand what is really taking shape and are not concerned with the staged sell-offs and fake dollar rallies will continue to prosper. Amateurs are better off trading a different market altogether because the metals complex is never easy...
Still long, too. Resisting being shaken out because the alternative is to be invested in US dollars, and THAT is a bad risk.
This is exactly what has transpired so far. There is no better place to be at the moment imo.. Today is a historic day in the world of fractional reserve banking. Never before in our collective history, the worlds central banks have decided to run the printing presses at full tilt in order to save the financial system from a systemic collapse. Some people say this is a repeat of the LTCM in '98 but I beg to differ, this is far more serious of a situation. The smart money continues to quietly exit paper assets while beefing up reserves of real money. The conditions exist for a truly explosive move in the metals and I remain committed to this vision...
Another development that is becoming very interesting of late is the purchasing of GLD by shareholders in the trust. Whenever gold is sold down about $10 during the NY session, some major buying keeps surfacing in the trust. Yesterday as cash gold was down close to $17 from the Comex close, the GLD added 13 tonnes of gold to the trust yesterday. This goes to show that firm hands are buying these pullbacks in anticipation for a major move higher over the coming months...
In the short term gold is really just consolidating within a triangle. Feb. Gold did touch an area of resistance today at 820 and some decent selling was observed. Even as Crude rallied significantly, the gold shares once again exhibited a muted response to the advance in gold metal today. There is still a significant chance that gold is taken down to the 780 region. With the markets still exhibiting harsh amounts of selling and rising volatility, gold and silver normally gets sold and the short comms are sure to take advantage of this. If 780 comes our way then it would likely mark a very important low in gold. I would expect a similar move in silver down to at least 14.20 or so as significant support... (Ruben V.'s chart, my annotation on GLD)
Do not trade according to what you expect or hope for, but what is happening now. The place to be now is where prices are going up now, not markets that are merely consolidating. As long as the Fed keeps printing money, that place will be the stock market because profits will look better due to $ debasement. I'm not saying it's 'right', but it's the place to be -- until it isn't. I have some gold in case the world comes to an end, but it's a modest position based on that low probability event.
@Martin, This isn't 2001. Its 2007, and this ain't your daddy's gold market. Gold has been the place to be for the last 5 years, and will continue to be, until it isn't. A few weeks of consolidation doesn't warrant abandoning an extremely bullish sector.
It all depends on your time frame, doesn't it? The only thing I advocate abandoning is a preconception.