OT TO K-G: Gold already had its correction. GDX dropped below $36 several times a few weeks ago, HL dropped over 20% from its highs before the recent rebound. Now Washington is debating yet another stimulus package. Add a Trillion for health care, add several more Trillion to bail out the states and GDX, HL and all other precious metal plays will be off to the races. My conservative estimate is that GDX goes to $80. If Washington continues its extravagant and unsustainable spending spree it will go over $100.
So far my VXX trade has gone against me, but its still early. Mondays direction is usually dictated by the non-professional trading crowd acting on pent-up weekend emotion. Despite today's rise in the market averages you can see a shift in professional traders with strength in Treasuries. Watch "TLT" which signals this shift. Smart money is temporarily moving to Treasuries to side step the correction. The VIX and VXO both dropped again today. A 100 point drop in the S&P is in the cards, soon in my opinion. This week or next. I can bide my time. But again, as for gold we've already had the correction. Gold has been acting as the front-runner for major market moves since last fall. Precious metal equities dropped 20-25% a few weeks ago. I don't expect that deep of a drop in the S&P because it's not leveraged like the miners. But a 10-15% drop is anticipated and absolutely necessary to form the basis for the upcoming late summer/fall rally.
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