I wrote about trying to catch the falling knife of Gold at 1220. There were a few fleeting attempts at salvaging that level. last week we traded 1213 and then snapped back to 1267 effectively car-jacking any one who sold against that trend line too early. That 54 dollar rally translated to $1800.00 loss on every mini future you might have been short. Not to be over done, the market turned and dropped 73 bucks between that high and today’s fresh 4 year low. The round number $1200 is now in play and a lot of folks are now talking 1000 as the next stop.
My one question is this. Where were these sage folks last year when we were at $1750? All the more reason to beware free advice. Those gold bugs who were predicting the zombie apocalypse might one day be proven right for all I know. Reality is however , if you bought Gold this time last year, it has left a sting, a mark, and probably a scar.
If you bought it as a percentage of your portfolio for “insurance” against your long stock positions, you are still OK.
But if you took a flier and sold your stocks and bought Gold, you’re smarting. You left 30% on the table by not being long stocks, and you took a 30% hit on your Gold longs.
I had suggested buying at 1220. Thankfully we had our stops and we are none the worse for the wear.
Support comes at 1182 ( the June Summer time Panic Low). I have a beautiful chart below showing how Gold broke from its double top high at 1809 in October of 2012, coincidentally one month before the 2012 Presidential Election. (That’s sarcasm– its no coincidence that the fear and loathing index was so high it pushed gold to those highs. At the time a lot of folks were talking about 2K and 3K dollar an ounce gold. The all time high, by the way was posted at the end of August 2011. That high tick was 1944,
You can see that on the second chart below.
Anyhow… What’s interesting is this Summer high was almost a perfect 38% pullback of that flush off that double top at 1809 from the Summer of 2012.
Going forward, its really any one’s guess as to where the bleeding stops. Next stop is 1182 and then 1150. At this point, for Gold, I’d be more interested in selling rallies, rather than getting bloodied trying to catch this falling knife. Make a stand at 1182, but be ready to run fast if it collapses.
Ditto when and if we trade 1150.
These are key technical levels of support which you should be aware of if you are speculating on moves in Gold.
CER
