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Gold Destroyed!!


By John Bailo   Follow   Wed, 14 Dec 2011, 5:33am PST   4,006 views   10 comments
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It couldn't happen.

It wouldn't happen.

Guess what...It Happen!!

The gold bugs are throwing in the towel

"As a result, contrarians detect a very strong wall of worry forming in the gold market, one which could very well be the springboard for bullion rallying into new all-time high territory. "

http://www.marketwatch.com/story/the-gold-bugs-are-throwing-in-the-towel-2011-12-14?link=MW_story_popular

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Dan8267   Wed, 14 Dec 2011, 7:16am PST   Share   Quote   Permalink   Like   Dislike     Comment 1

So, how does one most effectively short gold?

uomo_senza_nome   Wed, 14 Dec 2011, 7:37am PST   Share   Quote   Permalink   Like   Dislike     Comment 2

Dan8267 says

So, how does one most effectively short gold?

well, if you are bearish, you can buy long puts on GLD. Which means that when GLD goes down (GLD is a ETF tracking gold price), your put value goes up. if you are extremely bearish, you can do an iwog :)
write call options while buying put options.

Since options are not for everyone, there are other ways to play this too. I think GLL (2x daily inverse) or DGZ (1x monthly inverse). But it is tricky with inverse ETF's; they are very good for hedge fund managers, not so much for average investors -- who can't afford to get in and out of the market very frequently.

thunderlips11   Wed, 14 Dec 2011, 11:34am PST   Share   Quote   Permalink   Like   Dislike (1)     Comment 3

This article is actually arguing for a gold rally, by virtue of contrarian investment ideas:

We haven’t seen any such seasonal strength this year, needless to say. But gold’s seasonal tendencies are yet more evidence pointing in the same direction as contrarian analysis: Gold is due for a strong rally.

Personally, I think Gold has had a fantastic run, but I wouldn't say it's the early 80s all over again. There lack of trust in financial institutions and government seems to be running very high these days.

That being said a correction into the $1300-1400s wouldn't surprise me, but we could just as easily see a run up to $1800 and beyond, particularly come February after the Holiday Cheer wears off...

uomo_senza_nome   Wed, 14 Dec 2011, 11:40am PST   Share   Quote   Permalink   Like   Dislike     Comment 4

thunderlips11 says

Personally, I think Gold has had a fantastic run, but I wouldn't say it's the early 80s all over again. There lack of trust in financial institutions and government seems to be running very high these days.

completely agree.

we are far away from the manic parabola phase.

although you never know what the future state of monetary system could be; given that the only solution for foolish politicians is print, print, print.

See this: http://tradewithdave.com/?p=7173

And then there's FOFOA's inverted waterfall theory: http://fofoa.blogspot.com/2009/12/gold-ultimate-un-bubble.html

I think it's wise to save in gold, you just have to be careful about entry/exit --as with any asset.

thunderlips11   Wed, 14 Dec 2011, 12:01pm PST   Share   Quote   Permalink   Like   Dislike     Comment 5

uomo_senza_nome says

I think it's wise to save in gold, you just have to be careful about entry/exit --as with any asset.

Nice links. Thanks Spaghetti Western Man.

I particularly enjoyed the FOFOA bit about Gold being an un-bubble.

TMAC54   Wed, 14 Dec 2011, 1:10pm PST   Share   Quote   Permalink   Like   Dislike     Comment 6

Last I heard Gold cost $1100 per oz to produce.

http://www.miningweekly.com/article/what-does-it-cost-to-produce-an-ounce-of-gold-2009-03-16

uomo_senza_nome   Wed, 14 Dec 2011, 2:09pm PST   Share   Quote   Permalink   Like   Dislike     Comment 7

thunderlips11 says

I particularly enjoyed the FOFOA bit about Gold being an un-bubble.

If you haven’t read FOFOA, then you haven’t been into “the matrix” of gold :)

His posts on hyperinflation are the best I've ever read.

iwog   Thu, 15 Dec 2011, 1:57am PST   Share   Quote   Permalink   Like   Dislike     Comment 8

No bottom on gold until $1000 or March 2012.

Gold was a bubble, and I think it was only the extreme turmoil of the Euro that caused it to hold on this long.

FortWayne   Thu, 15 Dec 2011, 3:27am PST   Share   Quote   Permalink   Like   Dislike (1)     Comment 9

iwog says

No bottom on gold until $1000 or March 2012.

Gold was a bubble, and I think it was only the extreme turmoil of the Euro that caused it to hold on this long.

Are you going to be shorting it? You did well recently with it I remember.

iwog   Thu, 15 Dec 2011, 3:38pm PST   Share   Quote   Permalink   Like   Dislike     Comment 10

Other than writing calls and letting them expire, I have all the big money on silver short positions that I took in September before the big crash.

Gold and silver will move together so as gold crashes, silver will follow.

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