More bad news

Ron Rosen has revised his view of the coming correction in gold and thinks a low of $654 is possible. I wouldn’t say that here unless he expressed himself with high assurance of likelihood. Please be aware that Ron Rosen has been very bullish on gold and would only say something like this after serious consideration.

If you are 100% non-leveraged, meaning you own your investments completely, then the most to consider is lightening up. If you have used margin or leverage, please be super cautious and use stops diligently. In fact, unless you are a professional trader, using margin is foolish, period.

This low seems scheduled for early October so we won’t have to wait long. But if we get as low as $654, it may throw into question the parabolic move happening now as we thought previously. A low of $830 is a much more friendly outcome in terms of the parabolic move. So let’s see how far down gold goes.

This is completely in keeping with a possible crash in equities, which may cause the dollar and bonds to shoot up. The decline in gold depends on how much the dollar goes up, which may depend on how much panic erupts. Just something to keep in mind.

It is definitely prudent to lighten up on mining stocks and silver, which will be even more volatile than gold. But on the other hand, they corrected a lot harder last October so they may not come down as hard this time. In any case, mining stocks are subject to severe declines in market panics because they are accessible to ordinary investors.

If none of this comes to pass, then waiting for a positive signal like a new all-time high in gold (meaning higher than $1033) is the next step. It’s not such a bad thing to give up some potential profit (the difference between the price now and $1033+) to be safe. On the other hand, if a major correction does come to pass, taking some profits now is not such a bad thing in order to buy more cheaply in early October.

All this is dependent on your own risk profile and whether you are trading, investing, or using gold as insurance. Trading is only for those who can pay constant attention to the markets and have plenty of experience. So if you are not watching the markets daily, don’t trade. Maybe lighten up and buy more when prices come down - that’s investing. If you have gold or silver coins, they are likely acting as insurance so get more when prices come down.

Let’s see if gold goes lower into early October, and how low.

This entry was posted on 16/08/2009 at 11:29 am and is filed under Gold. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.

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