December Gold is what we’re trading now. August is in delivery and I wouldn’t trade that unless you have the physical product.
December has the volume anyhow, so December is the new option I’ll be using.
High today 1397 Last 1395. Last night’s low 1368. What’s interesting is that gold and the stock indexes are both higher. Typically people like to think that gold is the hedge against stocks, but that isn’t a hard and fast rule and it can haunt you if you get married to that idea. AM Radio talk show hosts are entertainers, not traders. Gloom and doom prepper publications sell gloom and doom and if you bought into their hysteria at the wrong time in the past 3 years, you’re probably down money.
Remember Silver at 50 bucks an ounce in 2011? Look at the Chart Below:
Take a look at the Gold Continuation Chart…
If you bought the panic high in 2011? You took a 600 dollar an ounce hit, or 1/3 of your $$.
Oddly enough, the Stock market, which you were “escaping” rallied like a stuck pig.
You watched the Dow rally from 11,000 up to 15,500 for a 36% gain. So in effect, by following the herd buying gold and selling stocks, you had a net/ net los of 36 % in the stock market which you opted out of and a potential loss of gold from 1800 down to the low at 1200 which is 30%. That’s a nasty swing of 66%—- the wrong way… So your 1MM dollars, which if you had sat tight would have gained 360K on paper? You turned that into a 300K loss in Gold and the 360K loss you chose not to participate in by avoiding stocks. The 360K “loss” in the Stock market is an opportunity cost, but its still a cost.
And if, by chance, you were foolish enough to sell the index futures as a “hedge”, then you really wet the bed. You lost on any net short position you held during this rally in the Stock Indexes. If that is the case, your $1MM in 2011 is now worth probably 300K. A loss like that will leave a scar.
This is the risk you take if you get emotional on trades and listen to the news, the AM Radio fanatics on both the left and the right. The herd is the herd. The herd gets eaten by the crocodiles when they cross the river together.
Just food for thought here.
If you’ve been following along, you know that I suggested flipping and getting long gold on a technical move about a month ago. Please feel free to go back and “Monday morning quarterback” my entries.
If you are long gold here, I’d be selling at least 1/3 of my position.
If we take out 1400, we should run up to the next resistance at 1425.
CER