Lightening Up on Gold

by JDH on April 15, 2017

I spent the last week taking profits on my gold holdings.  I’m lightening up.

This is not to say that I think the gold run is over.  I don’t.  I think it’s just beginning.

But, my favorite gold trading vehicle, NUGT – Direxion Daily Gold Miners Bull 3x Shares NYSE + BATS, which was trading at $7.50 in the second week of March, traded as high as $11.62 on Friday, for a one month increase of well over 50%.  Do I expect it to increase by 50% every month?

No, no I don’t.  I suspect a pause is in order, so I’m taking money off the table.

The chart of gold itself is similarly instructive (click to enlarge).  From the $1,130 level at the start of the year to almost $1,300 today, that’s a big increase, and gold is looking increasingly overbought.

Drawing a downtrend line from the summer 2016 highs, to the Trump Bump on election night, brings us to where we are today.  Gold is at almost $1,300, but it’s not at $1,300, and I suspect that level will provide significant resistance.

So, I’m taking money off the table, moving a 50% cash position, and I will deploy that cash if and when we have a correction.

If we don’t have a correction, fine, I still have money invested, but I’m happy with cash, and I can sleep at night, and I will.

That’s the plan.

Short and sweet.

See you next week.