Issue #73
Dear Member,
Gold is getting hit hard this morning, a reaction to two things: First, Europe’s ongoing nightmare with disinflation and its sovereign debt crisis, which prompted the European Central Bank (ECB) to slash its benchmark interest rate to 0.25% on Wednesday.
And second, this morning’s strong employment data in the U.S. — which has everyone concerned that the Fed will soon effectively raise interest rates by tapering its bond purchases.
In addition, gold has broken technical and psychological support at the $1,300 level.
But as in many market, nothing is ever quite as it seems. As long as gold holds major support at the $1,262.50 level on a closing basis, it remains in a position to stage a very powerful rally heading into December.
That’s where we stand. And though your positions are now underwater, I urge you to hold them and remain disciplined and patient. If gold closes below $1,262.50 on a daily basis, it will confirm a January cycle low that will see gold fall to as low as the $1,035 level. If we get that, you can bet your bottom I will act on it, as there will be a ton of money to be made.
Right now, I repeat, hold your existing, very light positions. Be patient. Do not overtrade. Let the market give us the signals. Don’t try to trade this market yourself. You will only get beat up and wrung through a meat grinder.
The kind of swings you are seeing in the precious metals markets now are all part and parcel of a very big bottom being formed. We will catch the moves, but patience is the key.
Stay tuned,
Larry
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