Inflation Expectation Tuesday: Gold and Silver: Time to Take Profits?

One of the
most common questions I receive on a daily basis is what investors should do
with their Gold and Silver holdings. After all, the two precious metals have
been on an absolute tear rising roughly 460% and 500% respectively in the last
10 years.

To be sure,
we’re talking about some SERIOUS gains here. And it’s not like those who
invested in 2010 missed out on the fireworks: thanks to the Fed’s QE lite and
QE 2 programs, both precious metals have gone into hyper-drive in the last five
months, rising 14% and 66% respectively.

Now, no
investment can move this much in so little time without needing a breather,
which is why precious metals investors are peppering me with questions about
whether or not to lock in their gains.

My answer
is: it all depends on WHY you own Gold and Silver.

If you own
these precious metals because you want to hold them as catastrophe insurance or
a hedge against inflation, then issues like short-term drops in price should be
seen as buying opportunities.

Indeed, Gold
bulls have already ridden out 13 corrections of roughly 7%, six corrections
ranging from 10%-16%, and three full-scale Crashes of 22-23% since the Gold
bull market began in 2001.

So if you’re
a long-term bull, you’re used to seeing some serious dips in the price of Gold
holdings. And if you bought more Gold
during those dips, you’ve profited handsomely.

In this
sense,

In contrast,
if you currently own Gold or Silver for trading purposes, you need to closely
watch the below trend-lines when gauging when to take profits .

First off,
Silver has exploded higher since August, rallying over 60% since that time.

The below
chart shows the clear trend-line for Silver today. If we take out this line,
then we’re likely going down to at least $27 per ounce, if not $26.

Gold hasn’t
gone on anything like the vertical jump that Silver has. However, it has formed a defining trend-line over
the last few months (see black line below). A break here would likely take us
down to support at $1325 per ounce. And if we break that line, the next real line of support is $1,250 per ounce.

Again, keep
your eyes on these trend-lines, they’re the best means of determining when it’s
time to take profits.

Good
Trading!

Graham
Summers

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Comments

[Dolar in a vortex]

WWBD

What would Blythe do?

[Millivanilli]

Follow her cunt tracks.  

[dlmaniac]

The latest KWN blog reports that China has got LBMA by the balls and been draining LME like hell. Those silly CRIMEX rigging games only enable them to load more physical at cheaper prices.

At the end of the day LME will shut down gold/silver trading first and CRIMEX will either soon follow the suit or be ignored as an insignificant joke market from then on. Smells like London Gold Pool 2.0