I was asked a question on an article I had written for Seeking Alpha recently. This is as close as I can get for my Current Thoughts today.
-
Hello Doug–do you see todays action in Gold another dead cat bounce?
2 Oct, 07:41 PM -
This had a little more strength to it because of the lousy unemployment numbers and downward revision to last months numbers. I’ve been pointing to lousy data all year long and the Fed not raising rates is an indication they still see deflation as the problem.
If you recall, gold used to move up or down with the jobs data, and eventually it didn’t matter what the jobs data said, gold just moved down. Today’s data was a significant sign that there are problems ahead, but no, I haven’t changed my mind about lower prices. In a deflationary credit contraction, all metals will fall in price along with most every other asset and the dollar should take off over 100.
Think of it this way, if there is no real production in the economy, and this includes European, Chinese and other economies, where will money flow? Why are treasuries so strong? This has been going on since 2011 and only buoyed by bouts of QE everywhere, including here in the U.S. What can turn this around but more QE?
The Euro has been a bit stronger and the dollar a bit weaker of late. This won’t last. See how everyone forgot about Greece? Greece didn’t just disappear and all is well there now. Germany has their own issues with their auto industry now, and they were what was supporting Europe.
I am launching a new service for Seeking Alpha “ETF Leveraged Daily Trading Service” in the next few days and they have had me write some articles to have something that subscribers can look at once it is launched, In my Thursday write up I said I was long JNUG. Before that I said get long DGAZ. It was a good week.
The bounce in gold will be short lived. I rode it up and sold on Friday. Next week it may go higher or lower but my view for lower lows still exist as stated.
I don’t think most understand the stage we are in with the deflationary contraction despite me explaining most of the data I see so they can be on the same page.
Lastly, just because I see gold is going lower, I am clear that investors should be dollar cost averaging into a position and buying the dips. I have many, many clients who are doing so. No one will catch the exact bottom and I am clear on when I will write my “all in” article. But that should be when an investor makes their last allocation into gold, not when they buy all of their gold for their allocation (silver too).
Not many caught the DOW at its low of 7400 in 2009. The buyer at 8500 isn’t complaining today or complaining when the DOW was 18,000 where they may have taken some profit.
Related posts
About Doug EberhardtDoug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534
Disclosure:
Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with capital you can’t afford to lose. This is neither a solicitation nor an offer to Purchase/Sell futures or options. No representation is being made that any account will or is likely to achieve gains or losses similar to those discussed in this outlook. The past track record of any trading system or methodology is not necessarily indicative of future results.
All trades, patterns, charts, systems, etc. discussed in this outlook and the product materials are for illustrative purposes only and not to be construed as specific advisory recommendations. All ideas and material presented are entirely those of the author.