Saturday, December 5, 2009

Gold spikes charts update

This is an updated version of a previous post, in which I am comparing the different spikes gold has experienced in this bull market.

As I was saying in my previous post, in this bull market the metal's price has tended to go up in spikes, followed by long periods of correction and consolidation:

 Now the latest one:

Following a much better than expected employment report yesterday, gold and treasuries sold off and the dollar spiked up. Now the big question: has gold topped out yet? I don't know and I don't really care. I wouldn't buy in the middle of a spike, because well to be frank, that's a sucker's game: the probability that once the spike is over, the price will go back to lower levels than the current one is very high. I wouldn't sell my core positions either because I believe gold will go higher eventually in the next few years.

Short sellers may have an opportunity to make a quick buck here, but beware that:
1) that unemployment report may be revised,
2) Fed officials may come out in the next few days and downplay it's importance,
3) gold spikes have usually had longer legs then this,
4) gold mines usually top out weeks before the metal and haven't done that this time,
5) finally, doesn't it seem too easy ? I mean, could one single good unemployment report be enough to trigger a top in any large liquid market? If I have learned one thing about the markets, it's that it's usually pretty hard to make money.

Short seller beware.

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