Gold has dropped like a big, yellow rock for five straight days.
The trouble started when $1,650 started looking vulnerable earlier in the month. The $1,650 area was crucial short-term support. After all, gold had been on the skids since its slow trickle down from $1,800 back in October.
After steadily trending lower, we finally got the big flush yesterday. The bottom completely fell out and gold dropped from $1,608 to a low of $1,554 in less than 24 hours. Early this morning, it has repaired some of the damage. As I type, the spot price is in the neighborhood of $1,570.
So let’s review:
Last week, I warned you that gold was set to drop a $100 to $1,550– check.
I also told you $1,550 could become a stellar buying opportunity.
But it isn’t. Not yet, anyway…
Forget your fundamental arguments. Gold is at the mercy of technicals right now. Sellers want to sell and you can’t stop them from doing so.
And don’t get caught up in any arguments about gold being oversold. Don’t get me wrong– it is. Gold is more oversold now than it has been in years. But that’s never a great reason to buy something. Gold could continue to drop and remain painfully oversold for weeks. Thinking that it couldn’t possibly go any lower is just plain reckless…
There’s absolutely no reason to rush into a gold trade right now. If it begins to show signs that $1,550 really is going to be the price floor, you will have plenty of opportunities to pick it up on the cheap.
Just don’t get caught buying early.
Gold is a falling knife– it could cut deep. Let this rush for the exits pan out before you make any plans to buy.
Greg Guenthner, CMT, is the editor of the Daily Reckoning’s Rude Awakening. He is also a contributor to Agora Financial’s Trend Playbook, a free resource for trend followers and technical traders. Greg is a member of the Market Technicians Association and holds the Chartered Market Technician designation.
I invest in a “Dime” at a time so when the price drops like this I pick up more “Dimes”
The fundaments …
Seemingly, dollar has now found a pool of black gold to float on comfortably.
The entire north america continental shelf is floating on an ocean of black
crude. As of latest report the black ocean is comparable to the Pacific lake
in size and in volume of light density liquid. Not only the continent but also
the dollar will remain buoyant beyond visual range … till eternity.
Seemingly, it was gross negligence on the part of the geologists who has
long acquired the precision skill of measuring crude reserve to the nearest
cubic mm. That was technology since WW1, yet it was not applied.
Neglecting to the mercy of torturous oil embargo and mountainous debt.
When dollar floats, yellow stuff sinks and vice versa.
Both ways, left much to be skeptical.
is that code for .1 OZ Eagles or 10K total bought at a time?
Love your blog. Investors need to fully understand the gold price in order to maximize profit and wealth preservation potential. Tracking the gold price on websites like http://www.goldprice.net is essential when short-term and long-term investing. Keep up the great work.
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