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This is an update on the gold trade I entered on Dec 28, 2012. It is now midnight the morning of Jan 4, after the chaos of the FOMC announcement seems to have settled. At least, for now. Tomorrow may bring more heavy swings in gold, and the USDX.
I am still long on my gold trade, I have not exited my position. I had seen, at one point, a 40 point profit, but that wasn't exactly what I was aiming for. I don't want to get distracted with interim ups and downs for this trade. I am really looking for a buy and hold for a longer term upward dynamic with this trade.
Prices are hovering right around my entry price at this time, but I am willing to hang tough even if prices drop another several dozen points. I build a plan for this trade, and as of yet I see absolutely no reason to exit my position. My goal, at this time, is to remain positioned the way I am. My projected time frame for this trade is in months. This is the reason I bought using December 2013 futures, rather than the February front month.
Observe the following daily chart for the Feb contract for gold futures.
Although MACD is down for the Jan 4 trading date at current prices, I still see positive price and indicator behavior here. If prices take an additional significant drop during tomorrow's day session, I may reconsider.
However, it would have to be a very significant drop, and it would have to close down.
I can quite easily see myself holding this gold trade should prices drop below the recent lows. Again, I am looking for longer term gains here, and my priority is maintaining positioning regardless of near-term volatility.
One factor that could change my perspective are the COT results that come out tomorrow, although I doubt very much that such will be the case.
The FOMC statements made today certainly created a lot of hype and movement in the gold market and the USDX market. What I read from the statement was that they continue to plan unlimited QE on a monthly basis throughout 2013. Although there was some talk about maybe discussing the possibility of discontinuing QE before 2013 is up, I find it unlikely an end to QE will occur.
They seem to be committed to "stimulating" about 85 billion dollars a month, for all of 2013. That totals over 1 trillion dollars for the year. This seems like over the course of months, it will be generally bullish for gold. I see the market behavior today as being a very good "shakeout" for weak holders. By shaking out shaky holders, more money is being freed up to buy into gold later on, assuming prices do rally longer term as I expect.
I am still open to the possibility that I have made a mistake, and I will exit my position I feel its appropriate. I do not feel so yet.
If this was an advisory service, I'd probably say something like "buy gold now". Value seems to be upon us.
I am still long natural gas from a long trade I entered the mid-morning of Jan 3rd. I am still looking for a long entry into sugar. I am watching the USDX.
posts listed chronologically below