I analyze macroeconomic issues from a fundamental perspective, and I analyze market behavior from a technical perspective. Original macroeconomic analysis can be found here and both macro analysis and commentary can be found on my Caps blog. If you like or appreciate my analysis, please add yourself to my Following List

Tuesday, December 28, 2010

Update on my Gold Count

My last update was on Sept 14 (see Breakout? Not yet). Those of you who have read my blog for awhile know my views and my stance on Gold. That I am far from a Gold pumper, but still believe the Gold bull market has much further to go. This is why I don't put out a Gold count every week or try to micro-manage the waves. We are in a Gold bull market and all of the fundamental drivers that are moving it are still intact. Gold (and Silver and Gold/Silver Miners) are the largest chunk of my portfolio by far. And since I believe the bull market has much further to go, I am sitting back and not worrying about the squiggles.

The comments from my last post are still very relevant.

So even though we got a new all-time intraday and closing high of Gold in US Dollar terms, why don't I call it a breakout? Because it has still not closed above the trendline for the Large Cup and Handle formation that I have been watching. If we get a weekly close above that line, then I think we have an honest breakout.

Also keep in mind, I am a huge Gold bull, and I enthusiastically share my views, but I am certainly no Gold tout.

I have not been screaming about Gold recently through the nice rally we have been having. In fact my last post on gold was when everybody was screaming "Gold has TOPPED!!". (see: My hat is old. My teeth are gold. And now my story is all told.) What I did instead was to show the progress of my bullish prediction on Gold. And what do we have now? A new all time high.

I *hate* buying Gold on breakouts, maybe not quite as much as the people who recommend that you do so. Gold is a momentum player destroyer and will shake you off so fast that you won't know what happened.

I much rather prefer to buy Gold when *everybody* hates it. Like at the beginning of February (A little early in Dec: GLD Chart and then in Apr confirming uptrend: binve's Gold Foil Hat Zone: More Thoughts on Gold's Massive Bull Market) and the end of July (My hat is old. My teeth are gold. And now my story is all told.).

It makes me feel all warm and fuzzy when everybody is screaming that Gold has topped :) My PM and GSM long positions are by far the largest in my portfolios, much larger than my equity shorts. I am quite content to wait for another large pullback (and yes we will get one) and buy Gold again when everybody, once again, screams "GOLD HAS TOPPED! THE BUBBLE HAS BURST!". I am in no rush and the Gold bull market is far from over IMO.

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