Prospects for gold short term?

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Travlin's picture
Travlin
Status: Diamond Member (Offline)
Joined: Apr 15 2010
Posts: 1322
Prospects for gold short term?

After gold zoomed up in late September I didn’t expect it to keep climbing, but it has. The situation in Europe seems to be driving it.

On the other hand, when those dominos start to fall we can expect reactions that are very negative for gold.

1 – A renewed flight to the safety of the US dollar, which lowers gold prices.

2 – A route in stocks and commodities, including gold.

3 – A banking crisis that is likely to trigger an even bigger route in stocks and commodities, including gold, like 2008.

I think 1 and 2 are just a matter of time and 3 is highly probable. However, it could be several weeks, or maybe months, before they take affect. An additional purchase of gold could make money if the current trend lasts a few weeks and you have stop orders in place on a ETF. It is risky but tempting as a short term position.

The joker is the CME raising margin requirements again as gold approaches it former highs.

I’d like to hear your opinion.

Travlin

 

SteveW's picture
SteveW
Status: Gold Member (Offline)
Joined: Jan 21 2010
Posts: 490
Whither gold

Eh, gold crashed September 21/22 and closed out September at $1622.

A crash in Europe should be positive for gold but contrarily it could decline if investors need to sell their performing assets in order to meet margin calls on losses.

After today's gain with the bad news out of Italy it looks like gold is taking on a safe haven role and I expect it to retest the $1920 high before Christmas. 

If buying ETFs make sure to use those that are likely to hold unencumbered gold. If looking for trading profits the miners might be better in the short term as they are recovering in price and are showing the leverage with respect to bullion that is expected.

Travlin's picture
Travlin
Status: Diamond Member (Offline)
Joined: Apr 15 2010
Posts: 1322
Thanks

I appreciate your thoughts Steve. I meant to say gold zoomed up in late OCTOBER. You made an excellent point about funds holding unencumbered bullion. I use Sprott PHYS and Central GoldTrust GTU is my alternate. 

Travlin

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