As Gold Prices Retreat, Is It Time to Sell?

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Mike Hammer | July 1, 2019 10:57am ETF BASIC NEWS

gold bar closeup

This is one of those days where you feel like you know what is going to happen, and you wish your article submission deadline was 2 hours later.  In premarket today, gold has dropped below 1400 USD/oz on the tails of news of an apparent truce in the US-China trade war. Here’s the 5-day chart of GLD including pre-market and after-market New York hours; it isn’t hard to see the drop away from the peak.

gld july 1 2019 chart

 

 

 

 

 

 

 

(credit Fidelity.com)

Since gold is now below 1400, we have to consider 1400 as significant resistance overhead.  Yes, there are the optimists (read: perpetually gold-bullish) who will see this as a buying opportunity.  The trading reality, however, usually plays out that the first step down in a big market optimism change is just that – the first step.  Which is usually followed by second — and even third steps — down.

Last week our trading advisory put a stop under our naked NUGT position.  We’re going to leave that on, and it looks like we’ll step out with a very healthy profit this morning at the open. If we’re wrong and the gold sector recovers we can always buy back in once we see 1400 become support again, or when gold breaks its recent high. We might miss a little gain, but we might also miss a big loss.

You might remember a month (and two, and three) ago when we were bemoaning the lack of action in the gold sector.  Well, that just turned out to be the setup for a nice blip up.  We bought a little during a low which will pay off nicely today.  Maybe we didn’t buy enough to buy that nice new yacht, but we were at least in the game and will walk away with a very successful month.

One thing is always certain when trading gold: There’s either something happening or something set up to happen.  Stay tuned for whatever happens next!

Signed,

The Gold Enthusiast

DISCLAIMER: The author is long the gold sector via small positions in NUGT, JNUG, a few junior miners, and a covered call on part of the NUGT position. He will likely get stopped out of some of the NUGT shares by the time you read this, as indicated in the article, but will have some shares left not under the covered call.

 



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