State of the Gold Bull Cycle... ?
...fwiw, my .02 cents:
We had a very similar environment exist in the mid-cycle portion of the last 2 OSX cycles. 3-4 nice rally legs; with 2 primary events signaling to me personally; that raising tight trailing stops and not buying ANY dips/pullbacks - but, only re-buying a breakout thru prior resistance to new highs... as the best risk vs reward trading strategy as we morph into the later, maturing part of the cycle. The 2 primary events signaling a change in trading strategy here, were:
1. The media capitulation... from nearly universal nay-saying and poo-pooing all things gold... to begining to report things more neutrally, if not even positively and the Gold Sector getting its well earned headlines of leading virtually all other market sectors in YTD returns.
2. Publically acknowledged arrival of both INSTITUTIONAL and MOMENTEUM traders (ie: Cramer).
While neither of the trends signal the end to the upside (unless POG fundamental reverse rapidly) they do however signal a profit taking & retention strategy and the morph to more technically vs. fundamentally oriented trading.
Basically the ESF/PPT arrived in force yesterday to plug the dike on the WCOM led selloff.
CNBC had 2 very germane commentaries intra-day yesterday that spoke volumes:
1. Art Cashin - who's a straight shooter & savy oldtimer who should always be listened to....said:
- "they aren't selling them off like the should/need to:
...and he was right and in essence was calling the the ESF/PPT futures jam - a faux market plug/rally - which it obviously was.
2. CNBC reported that Goldman & 2 other firms were heavily in buying futures....(whodathunkit ?)- why didn't they just come out and call a "Jam Job" - as what it obviously was and say that the Fed obviously orchestrated the Exchange Stabilization Fund's - plunge protection team... to plug the dike !?!? - in laymans terms ?
This endorses what I anticipated... that being that the Fed, ESF, Central Bankers and the Gold Derivatives Cartel... would have at least one more significant salvo left (I think at least 2 more are left actually) to whack gold and cap Gold's ability to resonate as a global market warning barometer here on what looked like a global blow off in the making.
I read that Gold was up like $4-$6 in London and looked to open strong in NY, but was hammered.... whodathunkit huh !?!!? (ROFLMAO).
The fundamentals and ALL of the positive catalysts for a continued multi-year up cycle in commodities and gold - all remain in place; along with a multitude of potential "Rogue Wave" - when, not if catalysts.
I think this is a time to be heavy in CASH... with maybe only a 15%ish GOLD/PM exposure here... as if you're portfolio weighted in Gold/Pm's and you take a 20-30% pullback whack...you lose that money that should/could of been banked, but also lose great flexibility in what you can do going forward... as if you hold thru yet another pullback... you literally give most of this cycle back on what was really just one bad call - ie: chasing a dip, that was followed by another - causing you to stop out, or worse yet - tempting you into a fatefull 3rd knife catching attempt...and from a psychological trading position; you then are strategically and emotionally - in one helluva tough place to buy/add on strength after getting whipsawed...
This is a pause that refreshed; where the Fed, CB's and ESF have to expend more ammunition in capping gold.
They have to play their hand here; with me on the sidelines watching - with all of the options.
Imho - everytime that I step aside and bank a rally and am on the sidelines when they are forced to expend more ammo to cap gold; I get to then lever my re-entry opportunities both strategically and financially.
I remain ahead of the market.
Trading ahead of and out front of the market vs. in reaction to it.. is the single greatest lesson I learned from the last 2 OSX cycles.
Always beat the crowd...be early in, be early out... anticipate - never react.
Buying that 1st significant pullback, is usually never the last pullback... not after the reversal of public/media opinion of the sector and not after the arrival of some mo-mo players and not after 3-4 significant rally legs like we've seen.
Strategically to remain being able to "trade out front of the market, in anticipation of it... and not in REACTION to it... you either have to wait patiently for 2-3 dip/pullbacks into deeply oversold territory - ie: XAU 62ish and a HUI under 100 - maybe even that intitial liftoff base of 80ish that we saw in March.... those are dips and fundamental valuation levels that I would add to - but only if - the fundamentals for the POG haven't significantly changed..... otherwise I will stick to my trading plan that was battle-hardened thru the last 2 OSX cycles...of not giving into the temptation of buying the initial dips...
Be a pig, get fat; but not a hog - who always gets slaughtered.
Let the Cabal keep expending ammo... sit on the sidelines in cash and wait for REAL emotional exhaustion/capitulation of the mo-mo crowd BEFORE giving into ANY dip-chasing temptation....and if we don't see an emotional capitulation into a deeply oversold level here.... stay put and wait for that breakout thru resistance to NEW HIGHS - and then & only then - rejoin the PAR-TAY ~
...just my take on the state of the GOLD cycle.
Ciao~
GOLD: Foi Est Tout ! |
