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Actually not a bad day, but.......
As usual the rules that hold gold back on an up day were in fine fashion all day. Driving in this morning I was a bit surprised to hear the dollar was getting crushed, as when I went to bed last night it was higher. Now don't get me wrong, I think the dollar is toast, and unlike the morons on CNBC, I think this is a dead cat bounce and not a bottom. Anyhoo, gold was up $14 when I got to the office, and in true gold fashion, before I blinked it was only up $7, with the dollar fall still intact; oil was somewhat lower.
So, it was at this point that one of the rules came into play, gold is lower when oil is lower, and gold comes down when oil is higher.
The Consumer confidence number came out and it hadn't been this bad since 1974, this added to the dollar weakness and allowed gold to go even higher.
In all gold was good for $20 to the upside today, and even the gold stocks put in a nice day as the HUI also closed up $20. However, the difference between an up gold day and a down gold day is like the difference between night and day. On a down day, gold rockets down, has a small bounce and rockets down some more. Today was a classical up day. Up a couple of dollars, down a couple of dollars. It was fight the entire day. Typical market action. Silver had a nice day up some .75.
Are we out of the woods for this correction? Who knows, prolly not. But, I found it to be hilarious that there was barely a mention about gold or the dollar. They are so pollyanna on that station that it's ridiculous.
I also find it quite interesting that everyone and their mother is calling a bottom in the stock market. Markets do not bottom when everyone says "we are at a bottom." Markets bottom when no one wants anything to do with stocks and when great, well run companies trade at a 5 PE basis. We are no where near that level. Many people and CNBC are in for a very rude surprise.
As I wrote last night, I thought the fact the gold stocks acting so shitty yesterday was a sign that more pain was in store. I was quite wrong and thus missed a good part of the rally this morning. I had a chance to buy a few stocks this morning but passed as I did not trust the gold rally. I guess that was a mistake. For what it's worth, I went home long a few gold stocks, but I am not that heavily invested. If the dollar keeps tanking and we have a follow through I will get more heavy into the stocks.
So, it was at this point that one of the rules came into play, gold is lower when oil is lower, and gold comes down when oil is higher.
The Consumer confidence number came out and it hadn't been this bad since 1974, this added to the dollar weakness and allowed gold to go even higher.
In all gold was good for $20 to the upside today, and even the gold stocks put in a nice day as the HUI also closed up $20. However, the difference between an up gold day and a down gold day is like the difference between night and day. On a down day, gold rockets down, has a small bounce and rockets down some more. Today was a classical up day. Up a couple of dollars, down a couple of dollars. It was fight the entire day. Typical market action. Silver had a nice day up some .75.
Are we out of the woods for this correction? Who knows, prolly not. But, I found it to be hilarious that there was barely a mention about gold or the dollar. They are so pollyanna on that station that it's ridiculous.
I also find it quite interesting that everyone and their mother is calling a bottom in the stock market. Markets do not bottom when everyone says "we are at a bottom." Markets bottom when no one wants anything to do with stocks and when great, well run companies trade at a 5 PE basis. We are no where near that level. Many people and CNBC are in for a very rude surprise.
As I wrote last night, I thought the fact the gold stocks acting so shitty yesterday was a sign that more pain was in store. I was quite wrong and thus missed a good part of the rally this morning. I had a chance to buy a few stocks this morning but passed as I did not trust the gold rally. I guess that was a mistake. For what it's worth, I went home long a few gold stocks, but I am not that heavily invested. If the dollar keeps tanking and we have a follow through I will get more heavy into the stocks.
posted by Neal | 9:42 PM
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