Gold!!

I think it is pretty safe to say that the old saying "it as good as gold" has taken on a new meaning. After countless days of rain here in NJ, the sun finally came out, giving us hope that the end of the world isn't upon us. I saw my 2 nieces running down the driveway with some buckets and a drainer. I asked what they were doing and why weren't they going to play kick the can with their friends. The oldest looked at me and said, what the #@%& is kick the can you old hag? There is a huge puddle over there and we are going to look for gold. Did you see what gold has done the last month?

Yes, gold is the safe haven and there isn't a person on the planet who thinks gold will ever go down. I can't remember the last person I saw come on and say "gold is overbought and you should sell". I am sorry, I lied, cnbc contributor Dennis Gartman came out last week and said he sold all of gold holdings. But yesterday was back on cnbc saying “gold is going higher” that was quick!!

Seeing headlines about “is gold heading to 2000, 3000, 5000, 10,000 everyday has everybody wanting in the yellow and they are buying it at any price. The question is, will they still own it by the time it gets to those prices? Yes, I do believe gold is in a 20 year bull market and yes, it will hit one of those targets, most likely the higher levels as well. Do I think it heads to those levels now? I may be one of the only writers on the web that will say NO!! Does this mean I think gold heads straight down? I am kind of hoping, as I started buying some gld September 170 puts. This is after getting absolutely SMOKED on my last try at this trade.

Yep, timing is EVERYTHING  when you are a trader!! When you to finally give gold a shot on the short side and the US debt get downgraded literally 1 hour after you enter your short position-THAT IS NOT GOOD TIMING!! So here I am again, giving the gold short trade another shot. I guess I just like picking fights with the biggest kid in the playground.

As I am typing, the PPI numbers came in a little hot and they are trying to rally the troops by propping up the spx futures with the “stagflation trade” This is a great economy we are in-inflation heading higher-unemployment heading higher and wages flat for the last 10 years. You would think that gold would be up another $35 on those numbers, but it is about to go red. One would expect the indexes futures to head lower on these numbers, but they haven’t budged and are maintaining the small gains this morning. Maybe the street realizes the PPI numbers are from July, when oil was averaging $100 and we really aren’t seeing inflation anymore, but maybe, just maybe we are seeing deflation.

If what the Fed fears most is actually happening (deflation) then why is gold such a safe haven? Before I get a boat load of fan mail, let me repeat, I DO believe gold will see 2000-3000-5000, I just DO NOT believe it happens now. There are just too many traders jumping on the safe haven boat right now and very rarely will you see any trade that crowded actually be “the safe haven” at that time. Just ask all of the silver traders how that safe haven trade turned out for them when silver was going up 20% a month?

Can I get smoked on this gold short trade? You bet your bottom dollar and why it is a 2^nd round of RISK money in this trade. The 1^st round had my risk trade turn into wall paper in 1 hour L Here are some of my reasons for the short side here. Everyone jumping on the “good as gold trade” looking at the 2000 level and not seeing what is right in front of their face. Gold has yet to take out the previous highs!! So yes, I just told you my line in the sand and that isn’t that far above and why I am taking the trade here. If gold jumps up $20 from here, I am out with just a fat lip this time and no broken nose-2 black eyes and a concussion like the last time I tried this side on old yella.