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Wednesday, December 2, 2009

got balls?

Seriously thinking about starting a short position in Gold. I look at these charts and I just itch to take on the trade.

The move has obviously become parabolic, and has been in such a position for a month now. The shear momentum is not sustainable. Prior to November, the move was steady and consistent to the fundamentals of the world economy. But now the momentum is at a point where economic fundamentals does not merit the acceleration.

The scenarios include:

1. Inflation - There is none at the moment, and rates simply do not justify it.

2. Safety - Understandable. Supported by the money being pumped into Treasuries. However banks are getting better capitalized, and Bank of America exiting TARP is a prime example. Things have gotten better.

3. Currencies are obsoleted - That is the ultimate of bullshit reasons. Fiat currencies will never go away.

4. Central bank are buying to diversify - Understandable, but due to #3, stupid.

Whatever the case, I feel the trade is getting tired. Not taking the trade now, but will be waiting to bounce on it. Ideally, would like to position the trade as rates are rising, pushing the dollar higher, because that is when I think it will really collapse.

Will play it via the DZZ.

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