Happy Days for Gold?


"Gold was in the spotlight on Friday in a big way, nearly moving $39."

Gold was in the spotlight on Friday in a big way, nearly moving $39. Is this a hat tip to the big move that many goldbugs have been anticipating? Is all the money printing by the Federal Reserve finally catching up with the U.S. dollar? Should you have bought gold on Friday because it's a straight line up from here? Let me preface my answers by saying that I'm a short-term trader that will sometimes allow a trade to turn into a longer term trade but that doesn't happen very often. I'm currently flat precious metals but will be looking for a good risk/reward; but for anybody reading this know that this analysis is from a momentum-based perspective.

So the answers to the previous questions I believe are yes, yes, and no.

I'm a big fan of gold for a number of reasons (fundamental, technical, historical) but I know from experience that it trades much different from a momentum point of view. Just when it looks like gold is going to bust out and move to blue skies it seems to run out of buyers and reverses.

We could possibly move up to the 92 level before profit taking hits, but I just don't see a good entry at this point if you're not already invested in these stocks. It would be more prudent to wait for a slight low volume pullback before entering. The only problem with this way of thinking is there could possibly be many with this outlook, and that could actually propel gold to higher levels; but I'm willing to risk that because if it does move up even more, then that will confirm the strength and I'll buy even more on the eventual dip. If you are long from lower levels I would consider taking some profits off the table now to prevent yourself from giving up any of your gains.

"I made all my money selling too soon." –JP Morgan

Related Articles

Get Our Streetwise Reports Newsletter Free

A valid email address is required to subscribe