Gold Priced In USD – Invest Don't Trade

It remains to be seen as to what kind of “legs” this USD rally may have, and it’s implications with respect to the price of gold.

We’ve been over the “theory” as to why the Fed would prefer a lower price in gold as the US Dollar devaluation continues, but of course that’s all it’s been – theory. I fully understand the “short selling” in the paper market by Ben’s friends on the street, but to consider some kind of “global conspiracy” to keep the price “in line” with a sliding US Dollar would be a stretch for sure.

Looking at recent price movement we are “once again” in a position where both the U.S Dollar as well as gold have been falling together ( more or less ) where as just today, a decent “inverse” move with the dollar up and gold down another 17 bucks.

The analogy of “turning around a big cruise ship” as opposed to a motor boat comes to mind in that….these things play out day-to-day but are really moving on a much larger scale over a much longer period of time – and it does take time to turn that ship around. More time than most traders can bear.

It’s my view that anyone “building positions” in the precious metals around this area of price and time ( and lower ) shouldn’t really get into “to much trouble” looking longer term. It’s certainly not a trade, and it’s a big, big boat to turn so….weather or not you can take/manage the drawdown and slug it out is always a matter of ones personal trading / account / exposure / leverage etc…

Looking at specific “price levels” in an attempt to “nail it” on an asset worth 1300.00 bucks is a fools game, as fluxuation’s of 50 bucks here and there would apear normal ( % wise ) when trading “anything” of lesser value.

Hang in there is about all you can do.

5 Responses

  1. JSkogs October 9, 2013 / 11:27 am

    Good post Kong. Buying physical is a great way to prevent hopping in and out gold stocks when things get a bit weird. Buy it bury it forget about it profit later. I got extremely lucky awhile back and picked a gc when gold tanked to around 12. I intend to hold and roll

    • Forex Kong October 9, 2013 / 11:54 am

      Ive been actively trading “EXK” and done quite well. I see that all the charts look exactly the same.

      I’ve been looking at a 100% complete double bottom type thing in the miners. Otherwise ya – I see these guys “one twit in particular” contemplating the “levels in gold” between like 1260 and 1300, or 1300 and 1340 like they have any kind of significance. Week after week flipping and flopping from “bull run to begin” to “$1000 an oz” projections. Totally ridiculous in my view.

      I’ll keep a watchful eye, as with all things – and look at it when the opportunity presents itself.

      • JSkogs October 9, 2013 / 12:40 pm

        Ya worrying about sub $100 moves in a commodity that is thinly traded is not worth it. Just weight your ownership of it accordingly. I still feel the fundamental story holds for gold. Whether its a flight to safety or an inflation trade. Fact is, it has had a fantastic pullback from its high and nibbling on major dips at this point probably wouldn’t make a guy go broke you know.

        • Forex Kong October 9, 2013 / 12:58 pm

          You bet….anywhere “around these levels” is a great longer term opp, and likely the last!

  2. Power Corrupts October 9, 2013 / 11:00 pm

    Kong! turning a supertanker is a good analogy 🙂

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