sOb ... in my humble opinion, a buy and hold strategy (staying on the long side) at this stage of the game is economic suicide. The question is, how should a trader play this downtrend in gold while having a full diner plate of gold stocks that you wish you didn't have? Here's a tip, there wasn't anything that remotely resembled a basing pattern after the drop to 137 at the end of July 2002 ... I'm positive we're not going to go straight down to 137 but what I am confident about is that we'll stair step our way down to that level.
So my suggestion is to trade your way out of your deficit...
We're very close to a flagpole rally in gold stocks-- so you'll have to do the opposite of what I've been trying to advocate to you guys for quite sometime and that's trade the countertrend ... selling into strength and buying into weakness -- which is the complete opposite to trend following.
When to buy and hold? Look for a basing pattern like the one between April and August of 2003-- you'll recognise that pattern because you've gotten used to buying into weakness and selling into strength, only to find that the peaks and valleys aren't worth trading because the brokerage fees will eat up your account. You'll find yourself happily riding the uptrend and watching the low volatility accumulation happen, knowing full well that at some point it'll all go parabolic-- it did-- and now the game has changed.
...understand?
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