Interesting view on gold, Shakespeare… Obviously, I would prefer a long term gold trade. Maybe I swing-trade because I have been brainwashed by gold bugs who talk about worthless paper money, cryptic re-monetization of gold, Arabs switching to the gold etalon, “backwardization” of futures and significant discrepancies between the price of the metal and of its paper derivatives. On the other hand, the National Banks and Treasuries of powerful nations hate gold. It is clear why…
In contrast, among the serious “technicians”, Robert R. Prechter, Jr. and his group clearly stated that “the forces of deflation are simply overwhelming” and suggested early last year that a massive slide of gold was in the books. In December 08 they reiterated that $600 - $650 is the strongest area of support: the apex of the wave (4) triangle and a 0.382 retracement of Aug 1999 / the “lower trend line of the parallel trend channel formed by the advance from the same low“. Conclusion: “Gold should at least fall to this level. Greater bearish potential exists.” On your GLD chart the rising wedge also suggests a down move.
I am now studying your Reversal Risk Meter and getting ready to jump…I noticed that you bought already out of the money Feb puts. Do you plan to add May or Jun puts?
On my daily GLD chart, I added some Price Extension and Price Retracement lines. We are still in your wedge, but the downturn might be close… Strong resistance = 86.3 - 86.49. Strong support = 69.97 - 70.63. Weak support = 77.63.
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