Gold - Silver - The Herd Mentality - GDX Trade

OANDA:XAUUSD   Gold Spot / U.S. Dollar

For as long as I have been a goldbug there is no shortage of feverish rallies, conspiracies and let downs based on news and events. Keep in mind long term I'm bullish on gold , but short to medium term we are not positioned to rally, sentiment is just not right for a huge rally, so we are still in accumulation mode. Silver is still the undervalued metal in my opinion and where I continue to accumulate physically.

The Trump proposed Tariff and all the news concerning a "Trade War", saw a flight to safe haven assets like gold and bonds since the Thursday announcement. Breaking it down we knew days before hand that this announcement was coming, and the metals continued lower up and until the day of the announcement where we spiked. What does this tell us? First, Smart money did not see the announcement as a threat to world order. Second the retail investor no matter how many times they lose their butts, are always herded into the direction of the Lions. Third this was a knee jerk reaction. Fourth Goldman' Sach's issued a "BUY" on gold' at the perfect time yesterday, enough to push the herd right into the green pasture where the Lions were waiting. Well the Lions are feasting.


Gold' has once again failed to break the 1360 level which has held in the past couple of rallies, and the recent peak is forming an upper downward sloping resistance line. A close below the 1343 level and we will likely trigger a mini selloff as longs exit trades. Where we find initial support is at the 1338 1326 level which are the 0.382 and 0.618 retrace of the previous bullish swing. The stock market is strong, housing is strong, the world economy is strong and though we are entering the final stages of the bull market in my opinion (based on the restaurant factor) we are not ready to breakout just yet, but this did create an opportunity to reduce our positional cost on our continuing GDX' trade. Keep in mind this is a continuing trade where we are looking to increase our gold' exposure for the long term but using the herds money to do it with.


As we posted yesterday elsewhere we sold the 18May 23 Covered Call for 0.65 against our position where our average cost is 21.63. We have locked in a 9% profit in less than a month with this move but the intent is to either to close the position before expiration or let them expire worthless using the profits to reduce our position average cost per share. As we continue to chip slowly away we are building a larger position using market sentiment and the herd mentality to do this.

Summary: We now put ourselves in a win win situation with a guaranteed profit of 9% or reducing our share cost by 3%. This is all about money management and using our portfolio wisely.

Thank you Goldman' Sach's for the final mini rally!

Silver' is still the undervalued metal here!

Mar 27
Comment: GDX hit the MPM resistance level of 22.49.

Mar 28
Comment: This is not the time to catch a falling knife. We are testing the first support level as mentioned above, and are watching for a break of the 1326 level. A break of 1318 would be a bearish sign and we likely test the 1300 area which is critical to hold for longs. Our trade is well in the green and we will be watching closely to close this position out and look for a reversal where we may go long for a swing trade. Overall gold is setting up for a bullish breakout but the timing is just not right. YET!

Ok, I found that Gold chart I was after... Thanks...

I can't stress how happy I am to have found such objective TA on TV..... Obviously comes from a decent well grounded gentleman.. rare...thanks.
@goldbug1 quick question...I have been buying silver for a couple of years now from a reputable coin dealer; mostly Silver Eagles, Maples, Pandas. If for example, I purchased an Eagle for 19.50, what would spot need to get to before I could sell back to the dealer for a profit?
goldbug1 Bremily01
@Bremily01, If they are reputable you should be able to get 0.75 to 1.25 over melt depending on their inventory. If they are holding a bunch then they may pay less. Personally I do not stack eagles I stack 90% and older bars like engelhard and JM. The premiums go up during bull runs. I would check out APMEX if they are less than 75cents it could be worth selling and shipping to them.
goldbug1 Bremily01
@Bremily01, Guess I should have answered your question. 18.50 +-
@goldbug1 "bull market in my opinion (based on the restaurant factor)" what means the restaurant factor?
+2 Reply
bits_007 red2000
@red2000, yeah.... i was also thinking about the same !
+1 Reply
@red2000, When sentiment is high and people are feeling good financially they #1 Go out to eat. #2 They buy or start a restaurant. Many have dreams of owning their own restaurant and they do this at the wrong time. This is a sign of the market being overly optimistic and we are in the last leg of an economic bull market. Now I am not saying it ends next week or month, but we are starting to enter the last stage of the market cycle and this is a good time to start positioning with metals.

From the chart you can see smart money is already doing so. Slowly trending up! I still like silver here over gold.
+2 Reply
sandrodz goldbug1
@goldbug1, what is economic market?
goldbug1 sandrodz
@sandrodz, The economy is bullish, meaning expanding. Hence restaurant and services employment is going up!
goldbug1 sandrodz
@sandrodz, Here is the latest data. Wednesday, the third and final reading of fourth quarter gross domestic product showed that the U.S. economy grew by 2.9%, up from the previous estimate of 2.5%. The data beat expectations as consensus forecasts were calling for growth of 2.7%
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