Gold Looks Good Huh?
With the world in the condition it is in, how many more $40
drop [or more] “shoes” are still out there waiting to be liquidated?
Mind-numbing boredom in the gold trade day-after-day for weeks; then Boom! All
it took was 7 5M candlesticks and it was mission accomplished.
I’m going to repeat this because I think it is important:
forget the Central Planners for a minute [if you can]; think more about the
GLD. GLD is the ETF [exchange traded fund] that is in the top ten of gold
holders in the world. Gold has been higher 11 years in a row. The market is now
within about $40 - $50 of the 2011 close [1563].
What happens when all the “Ma & Pa Kettles” of the world
decide it’s time to take some profits from holding gold the last [pick a number
between 1 and 11] years. How does GLD sell [within two days for settlement]
tonnes of gold into a weak market without absolutely killing it lower? And if
that happens, won’t lower prices induce more panic selling?
Fact is, since the GLD was formed gold has been higher every
year. Maybe, just maybe, we get to see what happens when the other 800 lb.
gorilla in the room gets seriously grumpy and needs to sell.
Think it could get a little ugly?
“Oh boy.”
Everybody [meaning blogs and pundits] talks about the day
when there is no offer and gold is bid at $3,000 / oz. and there are no
sellers. OK, how about when you wake up some morning and Europe
is wall-to-wall riots and gold is $350 / oz. lower? If you own gold and the GLD
is selling 1,000 tonnes of gold with more to come, and you own some gold
yourself, what do you do? You gonna just sit there? [Maybe, but I doubt it. Why
do you think it is called panic selling?]
First and foremost I am a trader. When I come to the trading
table [pit or electronic] all my senses are on alert. I don’t buy hype; I try
and look at things objectively and the quickest way I can make money via the
algorithm. Right now, gold looks very, very sick and reminds my stomach of the
early 1980’s. Talk then was exactly like it is now.
Maybe gold goes ballistic from here and ends 2012 at $3,000
/ oz. All I’m saying is be prepared for something a lot lower than where we are
at now.
Opinions kill.
Have a good day everyone.
-vegas
