Gold lost 4.7% for the week and gave a down signal. See
chart below. It also dropped below the blue super-trend line which is another
signal to shed holdings. I had been in DBC which is a commodity fund. My stop
loss kicked in as DBC dropped below its super-trend line. Out of the trade for
a small loss. No pain there. Just a slight irritation that the trade did not
work out. Trading is a probability game. Nothing is certain. It is much like
gambling except markets have gone up longer than gone down and using Technical
Analysis (TA) we set up rules under which to buy and sell. TA essentially gives
us courage to follow a system where losses can be minimized and gains allowed running.
Some people like the style of contrarian trading. They jump
in when prices fall and will sometimes find themselves in the path of a falling
knife. I know an associate who did exactly that with financials in 2008. I
think that is a very risky way to trade. Almost a death wish. He pushed much of
his R/IRA into financials thinking it would bounce back and I suppose he would
have been right had he waited and seen a bottom first. But that is difficult to
see but certainly easier with TA.
With Gold taking another Southward dive, what about Silver
asks another friend?
I took a quick look at the charts on PAAS and SLV and can’t
say that I find anything there that attracts me to buy into those other than a
death wish. Better to wait for them to consolidate, see the selling tire and
then go in when there is a clear uptrend. SLV is about 50% of its peak back in
2011. How low can it go? Nobody knows… Better to wait for these to get up over
the blue super-trend lines and give entry signals..
Gold’s Glitter Gone? Maybe in the short term; but I cannot
say for how long…. Its time to shine in the sun will come again. That’s when I
want to buy…
Good notes on Gold. Good reminders on TA for everyone.
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