Issue #122
Dear Member,
This morning we’re seeing gold and silver get hit hard, mainly on concerns emanating from a World Gold Council Report published early this morning stating that Chinese gold demand may slacken this year and next.
My view: The report simply coincides with a pullback I was expecting in the metals, and sets the stage for yet another leg higher.
Keep in mind, fundamental news never drives any market. Hard to believe, I know, but if you’re a seasoned investor and trader, you will have learned early in your career that far more often than not, news lags the market, it does not lead it.
If Chinese gold demand is to soften, as the World Gold Council predicts, it’s no big deal. Why?
Well consider this: Over the last three years record Chinese gold demand did not prevent gold from falling. If Chinese demand really tapers off going forward this year — and there is no guarantee the World Gold Council will be correct — it will likely be a contrarian signal, and far more likely to coincide with a bottom then with a top and another leg decline.
Always keep in mind that markets do their utmost to trap the majority of investors, to throw them off track. The markets are never as they appear on the surface especially when you try to time them or figure them out simply based on news.
That said, hold all of your positions and related stops and remain patient. Stocks are about to head into another leg down, good for the recommended inverse S&P 500 ETF (SPXS). The dollar is looking stronger, good for our bullish dollar ETF (UUP). And the euro is starting to weaken, good for our EUO position.
Meanwhile, natural gas is preparing for another leg higher, good for our long position in UGAZ.
Best wishes and stay tuned …
Larry
— GST –>
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