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Gold And Silver Inverse Slamdown
It would appear that someone tripped and flipped the algo switch this morning as the ubiquitous morning slamdown has morphed into a take-off. Perhaps it is no coincidence that every Muppet's favorite banker (cough Goldman Sachs cough) opined on Gold's coming weakness yesterday and that hedge funds are the least exposed to the precious metals on record, which as everyone BUT Goldman knows, is the traditional signal that it is a time to buy. Actually we take that back: Goldman certainly knew it, which is why it has been urgently advising its clients to sell... To Goldman.
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I've been in only cash and gold for over a month. Happy to have had the chance to buy more on sale. Italian bubble is popping and taking the air out of Europe. I have absolute faith that the US Congress will screw up enough to push gold through $1700 within the next month.
Gold is going up because GLD's inventory is getting drained. Contrary to conventional wisdom, this is bullish, as it denotes great avidity for physical gold, which forces GLD to disgorge its gold in order to put out fires elsewhere.
This post, written in real time last week, when the bottom was being made, explains why the odds favor the end of the bearish leg:
http://www.dowtheoryinvestment.com/2013/02/dow-theory-update-for-feb-21-...