HH Gold: The Rate Hike Rally Continues

The last two bear markets in US stocks were deflation-oriented.

The next one is likely to be inflation-themed, and could feature the US dollar and gold soaring higher at the same time.

Chinese producer price inflation is suddenly growing at the fastest pace in five years, and it will soon be exported to America. 

Gold has been rallying since mid December. It may be poised to breakout to the upside from the $1170 - $1185 trading range and rise to $1200.

Hedge funds are holding a lot of short positions in gold on the COMEX.

That’s quite positive for the price, because most of these funds use a tremendous amount of leverage. That means they have a hard time holding onto their positions when they get margin calls.

It appears that many of these funds have added to their short positions into the current gold price rally, and that means a lot of their holdings are at or close to the margin call threshold.

Regardless, it’s important that gold investors focus where the price is now, rather than just on where it might be going in the future.

Here’s why: Just like plants in a garden, gold stocks and bullion need to be “planted and pruned”. 

Gold has rallied about $60 from the $1125 area lows, and investors need to trim holdings into this strength.

For all practical wealth building intents and purposes, it’s not that important whether gold rises or falls from here, but it’s very important to trim more positions if it continues to rise, and be a buyer if it declines.

GDX bulls and bears are battling in the $22.50 resistance zone.

Gold bugs should cheer that GDX rises out of the pennant formation and rises to the next resistance zone at $25, but investors should sell lightly into that rally if it happens.

Note the 14,7,7 Stochastics oscillator at the bottom of that 8 hour bars chart. It’s suggesting that the pennant could fail, and GDX could may not make it to $25 on this rally.

1 2
View single page >> |

Disclosure: None.

Special Offer For Website Readers:Please send me an Email to freereports4@gracelandupdates.com and I’ll send you my free “Gold Stock ETFs Versus Individual Miners” report!I cover the relative merits of each type of investment, and include key buy and sell tactics for each ETF and stock!

...more
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free iPad Pro.

FROM AROUND THE WEB