The fact that gold is outperforming everything out there is starting to make Joe Public sit up and take notice - this is a concern if you are a contrarian. Furthermore gold has pulled away from the safety of its 50 day moving average and significantly from its 200 day moving average. What is the significance of averages?? Well price tends to revert to the mean....... meaning.... this gold guy is getting a bit ahead of himself. The current up wave from Oct 28 has all the characteristics of a short term blow off and I expect a nasty correction around the corner.
I'm a super Bull on gold and expect it to become the safe haven that everyone runs too as the faulty tower paper currencies is built on crumbles. The motivation for gold spiking currently is not quite for this reasoning - not just yet. Some astute investors saw the writing on the wall long ago but most now are either looking for a return on their capital or expecting inflation to launch to the moon (Crazy since prices are most definitely not sky rocketing up at the moment!)
Imagine if you are a US investor - Uncle Sam is paying you 0.25% per YEAR on your savings! Won't you also be looking for a return somewhere, and hey gold stood like a proverbial rock during the crash of 2008. Seems like a safe place to park your cash - no? Careful - Mr Market has a way of ridding itself of late comers to the party.
If you are long gold for the next 10 years - then I would reassure you and say ignore any short term swings - your money is sitting in the right place.
If your focus is shorter term - few months to a year I'd recommend taking a seat on the sideline soon (today) There is a saying : "...gold goes up on an escalator and down in an elevator...." And this escalator is starting to get awfully crowded.
Here is a an interesting read - Faber is someone I truly respect and feel is one of the more astute market observers - read this and plan your future investments accordingly.
Marc Faber interview
Good Trading.
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