New News on Gold
I've decided to post specific stuff about gold from time to time starting this year. Why? It's simple really. Gold is in what may turn out to be the most extraordinary bull market of our lives. Did you get that? So shouldn't it deserve special attention? I think so.
The other reason is that if you've invested in gold - especially if you've taken a substantial position - then things like the correction we've been going through can be spooky. And unless you're reading good sources that help you keep your head (while everyone around you is losing theirs), you may be tempted to do something stupid.
Today's Update:
We'll focus on what trader's are doing. They're the ones causing the recent gyrations, so it's helpful to understand what they're up to. Make sense?
Right now - that is since the beginning of the year - gold has slipped below its 50-day moving average. So traders watch this like a hawk. As gold slips and then rallies, they'll keep one eye on where the current ("spot") price is in relation to the 50-day moving average. So here's what will probably happen.
- If gold stays below its 50-day moving average in the coming days, the traders will sell into every rally.
- If gold inches above its 50-day moving average, you should start to see them buy the dips.
Do you see the difference? If they're selling into rallies, the net effect over time will be to drive the price down - at least for the short-term. They'll be no support as the price goes down. The traders will be profiting from the gold price falling. On the other hand, if they buy on the dips - when the gold price goes down - then they'll provide support for the gold price. That means that the correction will probably stay on the mild side.
Right now, the spot price has inched up a bit and is getting close to the 50-day moving average. So the next few days - or maybe the next week or so - should tell us which it'll be: bigger correction or stabilization of the spot price.
None of this, of course, has anything to do with the fact that gold is in a bull market. But I just thought it would be helpful to keep us all calm and steady while it thrashes around.
The other reason is that if you've invested in gold - especially if you've taken a substantial position - then things like the correction we've been going through can be spooky. And unless you're reading good sources that help you keep your head (while everyone around you is losing theirs), you may be tempted to do something stupid.
Today's Update:
We'll focus on what trader's are doing. They're the ones causing the recent gyrations, so it's helpful to understand what they're up to. Make sense?
Right now - that is since the beginning of the year - gold has slipped below its 50-day moving average. So traders watch this like a hawk. As gold slips and then rallies, they'll keep one eye on where the current ("spot") price is in relation to the 50-day moving average. So here's what will probably happen.
- If gold stays below its 50-day moving average in the coming days, the traders will sell into every rally.
- If gold inches above its 50-day moving average, you should start to see them buy the dips.
Do you see the difference? If they're selling into rallies, the net effect over time will be to drive the price down - at least for the short-term. They'll be no support as the price goes down. The traders will be profiting from the gold price falling. On the other hand, if they buy on the dips - when the gold price goes down - then they'll provide support for the gold price. That means that the correction will probably stay on the mild side.
Right now, the spot price has inched up a bit and is getting close to the 50-day moving average. So the next few days - or maybe the next week or so - should tell us which it'll be: bigger correction or stabilization of the spot price.
None of this, of course, has anything to do with the fact that gold is in a bull market. But I just thought it would be helpful to keep us all calm and steady while it thrashes around.
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