In mid-August 2007, gold stood at a "relatively modest" $650 a troy once. But, after the Federal Reserve's aggressive rate cutting later that month, it began a rally that saw it add 58 percent to its price by March 2008, he added. Gold hit its peak price of $1030 on March 17 2008, Derrick said.
"The current decline in the price is down to deterioration in sentiment about the economic outlook (and the threat of rising deflationary pressures) rather than a reflection of greater optimism about the standing of the euro," Derrick wrote.
“Only Thing We Have to Fear Is Fear Itself”, Franklin D. Roosevelt 1933.
President Roosevelt was right. Fear is contagious. Fear is destructive.
Fear works in the gold market because it blinds investors. It will turn flawed into sound comparisons. Notice how the article compares today to a possible setup of March 2008. Investors remember the pain of watching gold fall from $1,000 to sub $750 within six months. The fear of the next big decline is likely to blind investors to the fact that the money flow setup is totally different. Today’s setup is quite similar to June-July 2006. Fortunately, or depending on your perspective or trading book it could be unfortunately, the 2006 setup did not preceed a sharp decline. Gold rallied from $588 on July 2006 to $1006 on March 2008.
Gold London P.M Fixed and the Commercial Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:
Source: finance.yahoo.com
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