It looks like we got a jump start on the May and summer good months I spoke about in yesterday’s Current Thoughts. We also got some volatility that I put in capital letters to expect with the Fed meeting and announcement coming this week.
Gold did get past the $1,200 resistance but hit the wall at the $1,208 resistance. I want to see a break of the $1,208 – $1,210 level to get fully into anything gold related, but I did post on Seeking Alpha Friday that a long in JNUG would be a good potential trade.
I also have said to keep an eye on the dollar and if it fell under 97 on the Index it may lead to a nice bump in gold and that’s what happened today.
Because we have a meeting on Wed., I want to see if we get a push down to complete the market makers dream job; pushing out shorts and now possibly pushing out longs by taking gold the other way. I don’t expect this to occur with the dollar below 97 though, but it is a possibility.
I might have been a little early wtih my leaning long last week, but I told those who are part of the ETF Research Trading Service this yesterday;
“If you have followed along with the trends the last few weeks, you can see how we have made money on many trades and got stopped out on a few. Overall, this is how it should be every week, EXCEPT for weeks the Fed meets or the Fed minutes are released. If after reading my Current Thoughts you know more than me on what to invest in, by all means do so. My advice is to not guess, but wait for the trend to establish.
Now, if I had to guess, I still lean long gold for whatever reason. The green weekly doesn’t tell me to lean long gold. I have been wrong on my leaning this way the last two days. So why do I lean this way? It is simply my stubbornness as a trader. With this stubbornness I want to teach you to follow the conservative path to making money, and don’t go with your intuition. This is primarily for gold related ETFs that I say this. Wait for the green weekly to appear on all three ETFs before going long GDXJ, NUGT and JNUG and you should do great. Wait for both DUST and JDST to go green on the weekly and you should do great. Everything else is a guess.
I don’t do bad with my guesses on gold overall. Some may know this. But please know I am not perfect and trade the green weeklies to profit and let that be your guide. And above all, KEEP A STOP. The market is never wrong, only you as the trader. Keep stops and protect your nest egg. Move stops up on the one’s you are profitable on and protect your growing nest egg. Know what data and news can come during the week and reduce your exposure during those weeks. Wait for the trend to continue or a new trend to develop and jump on it. Every week we have a new trade it seems. Just be patient for it to develop.
I will repeat; gold mining plays are the most difficult to play and it makes sense to wait for the trend to develop in your favor rather than gamble. None of the gold mining ETFs are green on the daily longs and DUST is green on the daily but not weekly and JDST is still red on the daily. This tells me NOT to play either side; despite my leaning. There will be a good trade that develops.
Every traders goes though what they think should happen. All we really care about is the price. Please know the difference and hopefully explaining what I as a trader goes through, it can help you as a trader.”
I am more comfortable with my leaning after today’s gold and silver price action and my intuition for the markets is still somewhat intact. The next two days will be interesting and I still have to say the Fed is limited in what they can do come Wed. Overall we can still keep on moving higher with the stock market, but what will that GDP report Wed. morning tell us? Can’t wait to find out!
I’ll leave you with a quote from Dennis Gartman’s Newsletter regarding gold;
“As for gold, ownership of gold in US dollar terms is a losing, mug’s game. There shall be a time at some point when gold in US dollar terms will turn bullish but that time is not now. What more really can we say?”
That was written just before today’s run up. I wonder what he’ll say tomorrow? If you didn’t know, Gartman runs two mutual funds whose investment direction is to buy gold in Yen or Euro terms. A little biased maybe? Hmmm
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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.