Metals Defy Odds, Continue To Push Higher; Beware
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Something tells me there are some underlying problems in the equity markets based on the way that gold is trading. Gold and silver, which had major breakdowns three weeks ago, have gone up almost every day since. We had turned short-term bearish while maintaining our long-term bullish posture. That positioning has not worked out well and has been rather painful, with gold rallying about $90 from the bottom, pushing through the key level of $1,265.
The action in gold signals that there is a problem beneath the surface of the markets. On Wednesday, gold was under pressure after the Fed minutes and out of nowhere a rally came and recouped all loses. The Wednesday night-Thursday morning trade saw gold take out the lows of Wednesday only to bounce back again; Thursday at 2 EST, gold exploded to $1,327 but sold off.
Taking in the whole picture, we remain short-term bearish for many reasons. If there are underlying problems in the markets, they have now been priced in, and if there is not, a sell-off is near. We expect a test of the recent lows, and that sell-off will come out of nowhere. Markets never announce themselves. Just be prepared for anything.