Is the bull phase in gold and silver over?
The fall in gold and silver prices has been dramatic, the sort of decline associated with a speculative blow-off. What now?
MACLEODFINANCE
In just three trading sessions, gold priced in dollars has lost over $100, and silver $2.
Other than profit-taking after a spectacular run, there are no new factors other than possibly a lull in bullish (for gold and silver) news.
Perhaps the “mystery buyer” who led gold’s massive leap above $2100 will be rumoured to turn panic seller, driving values even lower still.
So what should you do?
If you bought gold or silver recently, should you take profits?
If you were only thinking of buying, is the game over?
After all, is safety to be found in short-term government bonds, as we have been taught in all the text books of the last few decades?
Let’s put this in perspective.
The chart below shows the technical position.
This is as bullish for gold as it gets.
Gold has broken out from a near four-year consolidation, promising a substantial run higher over time.
And the moving averages confirm, being in bullish sequence.
Therefore, traders should look to buy this dip, the level and timing being their personal judgement.
The thing about trading is to take the view that if one misses an opportunity, another one will come along so it is a mistake to panic if the bottom of a particular dip is missed.
But that is not a realistic view for those who understand the bigger picture: i.e. it is the value of credit which is the problem, and it should be sold for physical gold which is legal money.
That defines the difference between paper markets and the physical.
It also defines the approach of foreigners towards dollars and dollar credit, compared with US-centric investors.
The former can see the US Government getting into an almighty debt trap, driving up US interest rates, and threatening to destabilise all dollar credit including the currency.
And if the King Rat of fiat currencies is heading for the trash can, so are all the other fiat currencies because the dollar is the anchor for the entire fiat credit system.
The latter group of US-centric investors see it differently.
They account in dollars, recording their valuations and profits accordingly.
This is why they treat gold as the subjective value and dollars as objective in any transaction.
It is why we price gold in dollars when it is dollars which should be priced in gold.
And it is why paper markets currently set the value relationship as opposed to bullion.
In a debt crisis, which is the other side of a credit crisis, the error in giving gold the price and not the dollar becomes apparent.
It is only a small minority of western analysts who suspect a debt crisis is developing.
Note that market participants still believe interest rates will decline, when escalating credit risk points to them rising, almost certainly sharply.
In conclusion, this dip in paper prices for gold and silver is perfectly normal and should not encourage those trying to protect their wealth to take profits.
Leave that to out and out traders who have an entirely different agenda.
0 comments:
Publicar un comentario