Issue #97
Dear Member,
Gold is up strongly again this morning, rallying to the $1,270 level. Everyone, and I mean everyone, now seems to think gold has bottomed, and they are jumping on the bandwagon.
But mark my words: Gold can rally a bit more, to as high as $1,300 — but then it will collapse in a crash that could send it plunging to new lows, below $1,100 — in a heartbeat.
Yes, I know it’s hard to believe. After all, the stock market is in meltdown mode, there are still major troubles in Europe, and the U.S. is not in such good shape either. Not to mention problems in emerging markets.
But just harken back to 2008 and 2009, when gold plunged over 50% in a few weeks time as that crisis unfolded. The same type of action is dead ahead for gold. And for silver.
My view: Do not, I repeat, do NOT buy gold or silver at this time. If you do, you will likely lose your shirt.
If I am wrong, and gold did indeed already bottom on December 31 at $1,178, then we need to see a closing above $1,289 followed very soon thereafter by a close above $1,320.40.
If that were to happen, I will tell you the bottom is in, confirmed, and we will then look to start playing the long side, for gold would have turned the corner and be on its way to $5,000 plus over the next few years.
And even then, I would not start playing the long side until a solid retracement occurred.
So right now, as to gold, I urge you to stay away from the long side. Don’t listen to anyone who tells you otherwise.
As to the existing gold inverse ETFs, hold those positions for now, with your stops in place.
Lastly, hold the inverse S&P 500 ETF ProShares UltraPro Short S&P 500 (SPXU), which is moving nicely higher as the stock market continues to fall. Also hold the VelocityShares 3x Long Natural Gas ETN (UGAZ), which is also surging as natural gas prices surged in yesterday afternoon’s session and is up again strongly this morning.
Stay tuned …
Best wishes,
Larry
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