Gold spiked to a high of 1925 an ounce on 9/9/11. On 9/30/11 it melted down to 1533 an ounce. What’s $400 dollar an ounce when the guys on the AM Radio are touting it? It’s not their $400.00 that evaporated.
A lot of hedge funds were long stocks and long gold as a hedge against those stock longs. Surprise, Surprise, both markets melted lower and the “masters of the universe” lost money on both positions. Lost money on the longs in stocks and lost money on their longs in the precious gold. What “seemed logical and pertinent risk management hedge” turned into a loser squared.
The recent highs at 1682 marked a 38% retracement of that $400.00 haircut. 1/2 way back would have been/ would be $1,729.00 We couldn’t get above 1,693/1,696. Right now we are at 1,643.
There will probably be support at $1,600 and then $1,580.
On a cautionary note for the bulls, I suddenly see less and less of the Cash For Gold Stores. For the past 2 years those stores were popping up like daisy’s. What does it mean if only Jewelry stores are buying gold to melt it down?
Bull’s last hope would be a melt down in Europe. I personally think that scenario has been beaten down and rung out for the past 2 years. The fact that every cab driver in Chicago now knows what the acronym PIIGS Stands for, and the fact that every one tells me they own gold, makes me think we are closer to the end of this story.
That is all