Gold - Who want to short it for long term ?

For the long term? You wouldn't catch me dead shorting gold long term. That sounds like suicide. Why do you think gold is a long term short in the current global environment of destruction of paper currencies?

Just to clarify, short term I do think it looks like gold could be a short... But when I hear long term I think at least a year+ timeframe. For 1+ year timeframe, I think we will see MUCH higher gold prices from current levels.

how can u see " much higher gold prices " ?

Gold is entering my $1080 territory. I traded DZZ and now I am thinking it might be attractive for a quick ride down to $950, then I go long gold :)

mathematico: why do u think it will go long ?

well a few reasons:
1-Central banks did not mind throwing in a few billions at $1040s. I don't think indians are dumb.
2-There is wealth in the world, currently distributed in the following asset classes I think:
A-Real Estate.
B-Currencies.
C-Equities.
The precious metals play has come into the spotlight recently again after 20+ years in the dark. In the emerging world, the rich ones has lots of money. Think Oil tycoons, think RE developers, etc. These guys see the US deficit and are squirming a little I assure you. I believe that even in a deflationary environment, there will be allocation to gold and silver which will provide some support to gold. Combine that with the historical trends of Fiat currencies, and I rather be in gold than holding say icelandic korona or sterling pounds. If I were an englishman today, I would be diversifying my cash to Swiss francs, USD and Gold.

We will see how much of a dip gold gets.

Gold is in a intermediate-term downtrend. It may bounce very short-term, but it'll be a bounce in a downtrend then head south to around 1,025 possibly 1,000. There it will find solid support and become a good opportunity to go long.

I predict $875 :-)

If gold sells-off to $875 I'll advise everyone to sell their house, dog, cat, car, wife or husband and back up a dozen trucks to load-up on the yellow metal. Two years from now you can buy back 10 of everything you sold, including the wife or husband.

First of when you talk about long term I keep 2yr-5yr time frame.
2nd being Indian I would never ever short gold long term
3rd there are many reason it's always better to purchase gold,
4th most importantly, Asian's will put lot of pressure to switch from USD to some other currency as world currency. Gold is gold no matter what currency Gold will always bring you money. It eliminates the currency issues from the equation.

No matter what part of world or what currency you will always have buyer for Gold. I would never short gold on long term, I will be a buyer of physical gold as soon as it drops below $1000 mark and i don't care how low it will go I will keep that buying as my saving.

When inflation hits we will see Gold rallying. I trust gold one it's physical and 2nd it will be honored in any other currency. If i decide to move out of USA I don't have to worry about the currency conversion rate, I can exchange it for house, land or food.

Hope this explains why Indians especially PATEL's only trust gold.

cheers!!

i agree with TraderMav, practically everyone I know will be selling every one of their possessions to load up on gold if we even get down to the $900-$950 level. You will see enormous amounts of buyers below $1000.

Thanks IrishTrader. Gurughantal, I've been wanting to ask, what's that you're smoking?

LOL @ Tradermav.

Ah: long term to me = 1.5 month - 4-5 months approx :)

But I think I will play the safe side and buy 2x short on gold and make an exit sooner.

Well that's a pretty short duration long term! :)

I would focus on the gold level, not the duration though. If we get down to $1000 / ounce, the risk increases by a lot of holding a gold short because $1000 is a strong support level as well as a psychological level. Sure it's possible we could fall less than $1000 but the probability curve starts favoring longs below $1000 in my opinion.

Everyone's looking to load up on gold at or below $1000. That makes me think it won't get there. I've placed my bets that it doesn't get there and I was early... also known as WRONG! Obviously the positions are hurting me here to start the year, but I still don't think we see $1000 print. In fact, I'm encouraged by this double bottom formation and think if we could get one more ugly shakeout it may be off to the races. Bernanke getting reconfirmed can't hurt... now he can get back to printing more $$$

That' what Fed Chairs do best ..... run the presses at full-throttle. Kinda surprised he finds time for FOMC meetings and the like.

I actually agree with you Pattrn. I don't believe it will get down to $1000 either simply because everyone is looking for that entry point. But I will admit sometimes markets can be very irrational so I don't completely discount the possibility. Bottom line, if you short gold, you better have your stops in place or it might backfire on you.

Anything is possible in the Short-Term. Gold may test $1,000. It may even brake below $1,000 and hit $950 or even lower maybe. I would still advise investors to continue accumulating. Long-Term I believe Gold will see much higher prices. I wouldn't be surprised to see $2,000 per oz. before 2010 is done.

Pattrn and Irish,
I believe we will see < $1000, but the question I had in the past is how much is the "premium" going to be in the physical markets?when gold was $800, the shops didn't want to part with their gold for less than $1000. silver was spot at $14 and the shop wanted $20. Pretty crazy premium.
Luckily for me, I know a place where I can buy at spot, so lets hope we get down below the $1000 mark soon.

But, to be a bit of a contrarian I would like to share a story about a chinese man. He was a wise man and there was a craze for gold. He sold all his gold and bought rice. he bought all the rice he could buy and after some time, the people who bought the gold wanted to eat that is when he sold them his rice for their gold.

xdream, for the record, "long term" usually means a period of years when referencing investing.

Regarding shorting gold for a few months.....well..... maybe it works, maybe it doesn't. The problem is, I'm about 99% sure you're fighting the long term trend (ie, long term meaning years) so you already have 1 strike against that trade. You now have the Fed holding rates at 0%....followed by the reconfirmation of Bernanke, the money printer. (strike 2). Additionally, we have a bloated stock market that, should it collapse or correct hard, could easily inspire people to rush and buy gold (strike 3).

The only way I'd short gold in this environment is if hit had a very rapid "irrational" run up (ie, a huge price spike of >25% in a week. The problem is, if that actually happened, there's probably a good reason driving it. Should I find the reason to be faulty fundamentally, that's the shorting moment for gold. Otherwise....be very careful with that trade!

thank you all, thank you also dirtyharry - I agree with you said just that I am also think that if you look at the chart - u can see that since April 09 the gold didn't make any correction till now... and I think that if this double bottom support will break down - we will have nice run shorting gold for few levels.

I consider "green light" to short gold when the double bottom will break down.

Thoughts ? :)

Your signal may be right ST, but as DH was saying above Gold has powerful fundamental forces supporting its rise Long-Term, i.e. Prolonged 0% Interest rates via the FED, Quantitative Easing through the FED and the Federal Government, Growing International move towards diversifying away from the US Dollar and using Gold to do so, and also growing uncertainty about soverign debt. Any of these forces or all of the above could cause a sharp reversal in the price of Gold, so I would the Risk / Reward on your proposed trade isn't really in your favor.

I took a look at a longer term gold graph which is here:

http://s573.​photobucket.c​om/albums/ss1​75/kenadler71/



I believe that if we break through that dark blue support, there may be some room to short. The dollar is on a tear at the moment, and the Euro could fall. This could lead to shorter term gold prices declining a bit. This is still a rather dangerous trade as it is against the long term trend, and the volatility of the market could quickly drive people to buy gold if there are major problems. I would only consider doing this trade AFTER it was clear gold broke the support, and using a relatively tight stop. Honestly I'd love to see gold pull back to that $850 support area so I can go LONG. That's the "safe" trade by comparison, IMO.

there are couple of trend-lines ( support levels ) that the gold has to pass through.

1. Support levels are broken like plastic if the trend is getting to go down.
2. The gold, as I saw, is better then silver and other staff to short... less support levels, as I saw.

Well... as I already said, I will have my 15-20% gain in few days of trade and snap out :)

I agree that if you're going to short around this time, gold is a better short than silver. The above graph is truly lover term (spanning years) and should be taken in that context. If the longer term support is broken, it may not even happen for a few weeks (sometime in mid-late February).

I think you guys are only looking at recent months or just a month ahead but on longer term Gold may go down in a big way.
However shorting currenty would be a bad trading decision.

If you kindly look at the history of Gold charts of past 2/3 years you will see JUL/OCT 09

Gold is conditional to many variables and there is absolutely no guarantee it will remain bullish forever and the talk of multiplying to 2k 3k etc is merely hype.
Gold and other precious metals including indust metals may drop to dust in next months. They could rise again but the markets would be very volatile in coming months.

The graph I posted above is a 5 year time span, not just recent months......

The long term support line (green) is up. Still, if the more interim support (blue) breaks gold could definitely fall back down to long term support (green)..... a 20% drop perhaps. I wouldn't want to short gold or silver until I see that interim support line break.....

I agree with you dirtyharry.
The markets are at crossroads. It would be wise to watch and go.

I think Copper, Gold and Silver area dead for some time. They may have short term intra day or swing opportunities but for long term they are going nowhere for now.

There is a play that can be made, I believe, right now for those aching to do something with the metals: The Gold/Silver Spread trade.

Gold is trading for about 66.5 ounces of silver at the moment, and looks like it may fall as measured by silver. The way I would play this in the short term is simple: Buy EQUAL dollar amounts of DZZ (double short gold) and AGQ (double long silver).

In fact...... I just may do this trade myself.......

If there is one thing I would NOT short long term - it's gold :)

BTW - I did the Gold/Silver spread in real money.

Long DZZ, Long AGQ

BTW - I did the long DZZ in my virtual portfolio.
I am now moving cash to my brokerage account for the first time in more than a year to short the market again.

bought yest gll
on my real money
i think i will aim 15% gain autosell

s&p500 - bought spxu at my real money. i think i will do 7.5% gain autosell

Gold broke the support that was illustrated above.......

yup! I am so proud. I am hoping to make nice move: I descided going to trade it for couple of weeks. autostop 30%.

btw: spxu - sold 7.5% gain @ 41.5$ after 3 days.

I am actually going long GOLD LOL!!