Gold bugs take big hit, but Asia is buying

Last week was dreadful for the gold bugs. But Asia may be coming to their rescue.

Using the CME floor close for the most active contract (February), gold lost $122 (7.1%). At the low on Thursday, the loss was 9%.

The NYSE Arca Gold Bugs Index closed the week down 9.1%. It is down 20% from the mid-September high. Most newsworthy of all, on Wednesday gold broke down through its 200-day moving average, provoking a remarkable range of funeral orations for gold’s bull market.

Arguably the most prominent of the mourners, the widely followed Gartman Letter, actually had a stop on its large gold position triggered very early on Monday morning, consequently avoiding most of the week’s damage.

But by Tuesday, TGL was proclaiming: “Note also the chart of gold in U.S. dollar terms. … We have the beginnings of a real bear market, and the death of a bull.”

By Wednesday, Gartman was talking about shorting gold against the S&P 500 Index

There’s wide agreement that gold’s charts now do indeed look gruesome. The situation was well summarized on Friday by Pring.com’s Weekly InfoMovie report: “Gold has now completed a massive head-and-shoulders top. The share ETF has also completed a smaller distribution pattern. … Lower prices look likely in the next few weeks. For the record, the head-and-shoulder objective for the gold price calls for an eventual move to the $1,300 area.”

But could this be excessive panic? GCRU, the short-term gold-trading service started by gold veteran Harry Schultz and now operated by the Aden Forecast, thinks so.

Very bravely, it issued a special alert on Thursday afternoon overriding its stops: “Our stop loss was triggered today on both gold and silver.”

“DO NOT SELL. Instead, we recommend keeping your gold and silver positions. …The markets are nearing a bottom, and now is not the time to sell.”

Perhaps supporting this, MarketVane’s Bullish Consensus for gold on Thursday fell to 58%. This may sound high, but in fact it is the lowest since December 2008. The lowest reading in that tumultuous year was 49% — early last September, it was 88%.

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Tags: Gold analysis, gold forecast, Gold future prices, Gold futures, Gold investment, Gold news, Gold price, gold price 2012, gold price forecast, Gold prices, price of gold, Spot gold, Spot gold price

Posted by admin on Dec 19 2011. Filed under Gold predictions. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry