Founders Gold Alert: A Bigger Correction is Possible
THIS IS A SPECIAL NOTE FOR SHORT TERM (1 week to 6 month type) TRADERS
THIS IS A SPECIAL NOTE FOR SHORT TERM (1 week to 6 month type) TRADERS
Yesterday TD Bank put out a report saying they got long Gold. We wrote that up here.
Included was this sentence:
We want to buy cheaper and look for capitulation signs given the weakness in retail demand in India, the lack of follow through from Shanghai, and the time spent at $2000 being so long (Creates option related congestion on reentry).
That was our actual opinion.1 Here is more on that. If you are a short term trader, or are on the fence about a decision, then consider this quick note.
Otherwise.. stay the course, and know why futures may soon drop
Why is Gold Lower?
Bank Buying May be Pausing
Retail Demand Slowed
Geopolitical Tensions Ease
Gold’s OI was not massive, yet it had rallied significantly. The thesis by several banks was/is: if gold can get this high without domestic investor interest, then imagine how high it can get if investors played.
CENTRAL BANKS MAY NOT BE BUYING
This could definitely happen. But the question that must be asked *after* a $300 plus move that was largely underpinned by Central Bank buying and had a lack of “traditional” domestic pure investment demand is this:
What happens if the Central Bank buying stops before the investors buy? Worse, what happens if a Central Bank like Russia starts to sell?
We think that is going on now. Oil is lower in price forcing Russia’s revenues down. They are likely to sell a little Gold for Yuan/Rubles when that happens. They did so in February as Gold rallied when oil slumped. China was the buyer of their sales back then, keeping the market buoyant.