December Gold - O 315.5 H 316.5 L 297.5 C 302 Chg. -.80
As I mentioned yesterday, hopefully you were positioned correctly to take advantage of this
rally, and more importantly that you were able to bank some profits yesterday. Today the
buyers dried out, as many scrambling shorts may have been rudely taken out yesterday. With
a bit of weakness today, this is probably healthy if the market is to continue higher. Equities,
the USD and bonds were lower, the CRB is moving higher, and metals have all reacted. You
should know by now that 15 European central banks and the SNB announced that they would
place a cap on the amount of future gold sales...this was the catalyst behind the recent rally.
The sales are capped at 2,000 metric tons over the next five years. The threat of further central
bank sales was largely responsible for keeping a lid on gold prices these last few months, and
now the lid is off. Also, the IMF has had their revaluation plan officially endorsed, which means
they won't be selling gold to finance third world debt relief. Is gold regaining favor as a financial
instrument? To repeat myself...the tone is bullish, but as always, don't become too
complacent and confident with your winners...protect what profits you may have. Technical
indicators are very positive, and we are above averages. If you are long from the 262 area as
we were on TradeScope, then hopefully you took profits on a portion of your position yesterday
and today. Remember I said that "Markets usually don't go straight up or down, so odds are
there will be a correction almost as severe as the rally." Well, if there is another dip this week,
consider buying calls. What's next...who knows, but there is no reason why the market can't
go higher, it just may need a more of a breather first.
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