Golden Rule
As I had mentioned in a prior post, the commercials were exiting the long side of this market. This was a bearish sign. I took some heat on that comment. Who are the commercials? What does one line on a page mean? My favorite was "there is alot more to it than that."
Was there really alot more to it? Look at the chart, and tell me if you think there was? Did the Chinese, just in the last few days decide to buy alot less jewelry? Did they abandon their big plan to load up on gold? The whole point of all of this is, that when you buy into the hype of things, just be careful about chasing extended price moves. This was not fundamentally setup, to continue in that same direction. It was clear to me that at the very least, you did not want to buy this market until a pullback occurred. I also openly stated, that I was looking for a short position setup.
I showed grahically, in the prior post on this subject, the difference between buying blindly, and buying on a pullback. Now you can see in real time, the virtue of not buying blindly.
2 comments:
From your charts I see the importance of discipline and timing.
Gold bulls don't care if they buy on a high, because they believe in $1000 or $2000 gold.
You make a good point about China. If China is really loading up on gold, then there would be no correction. Obviously, gold was overbought.
Let us know if the commercials get long. I'd like to get into a gold position, and perhaps a little bullion.
These sharp corrections can still happen even with strong fundamentals. This is where joe q public gets sideways with investing. Just because someone might think there is a fundamental reason why something should happen, that does not mean it will happen today.
These big picture things tend to play out over long periods of time. If you time things improperly, you can lose money, yet be correct on your analysis.
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