The mega-rally in precious metals is well known by everyone living outside of a cave. As fond as I am of precious metals, I’ve become quite annoyed at how unrelenting the rally has been, and as a card-carrying contrarian, whenever gold and silver are the talk of every ding-dong and nitwit on the tee-vee, I figure it’s probably game over for a while.
Of course, stepping in front of such a freight train is very dangerous, but yesterday I wanted to give my annoyance something meaningful to do with itself, so I shorted precious metals miners by purchasing the leveraged bearish fund DUST. How relieved I was when I woke up this morning to see gold in a triple-digit free fall………..
……..and my DUST long position, acquired where the circle is, flying high!
I felt particularly relieved because, just before I decided that this rally was unhinged and insane, I came THIS close to getting back into my palladium position. The chart looked decent, but one glance at gold and silver, and I looked at my screen and said, out loud, “nope.” There was no way I was going to get suckered into this vortex. Thank God…………….(red circle was the “nope” point):
Having said that, palladium is obviously getting more attractive but considering how far gold and silver should get pummeled before they are reasonable again, I’m not so convinced palladium is going to find support at that red line. It might need to get somewhere just in between the red and green lines before it can stabilize.
Broadly speaking, I think gold may have double topped for now, where I’ve drawn that rectangle. Again, as a contrarian, when I’m absolutely flooded with chatter about the debasement trade, and Ma ‘n’ Pa Kettle read about it in USA Today and are thumbing through a weathered Yellow Pages to try to find where to buy some, we’re just gone too far.
I can only hope the epiphanic moment the market is happening will make its way over to equities sometime before we all die.
