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« US Stocks: Down, Down, Deeper and Down | Main | Central Banks Push Up the Gold Price »

Gold prices: A bad day at the office

Gold Chart 02 June 2010.jpg

A strange day indeed where we see both silver and gold prices get hammered, the US Dollar knocked down from 86 to 84.6 on the US Dollar Index, the DOW down 40 points or so and WTI Crude now trading at around $72.66, nowhere to run and nowhere to hide.

As the chart depicts gold prices took it on the chin with a 3.52% drop, the technicals are heading south suggesting that we could be in for a lackluster summer. The summer being all of two months, July and August and in the past we would look to be buying in August, so as we see it the summer is a tad more than one month. If you are a very nimble trader you may be able to come out and go back in at lower levels, but that strategy does not do it for us. We will sit through it and look for bargains should there be a decent dip.

This might help you to keep your sea legs as the bears leap into life and short their fur off, its a missive just in for Jim Sinclair which we think sums up the situation pretty well.

There are times when you must ignore the hedgie madness in the marketplace and revert to why we are doing what we are doing.
The deflation being spoken of today is the catalyst for the coming hyperinflation. The fact is it has been so in all historic examples. The flooding of markets with debt has been brought on for different reasons, but the ways and means of hyperinflation has always been the same.
Therefore it is today's financial market deflation talk that is the reason why you should own gold.
This continued downturn in business will find government in a panic, not in austerity when their constituency does the Greek dance of panic as the pain on Main Street becomes intolerable. It will.
Contemplate what each of the following means to you one at a time. Do not try to do them all at once. You do not want to do this as a routine memory exercise as much as a meditation on why you have bought the insurance you have.
-Gold is a currency with no liabilities attached.
-Gold is competition to paper currency.
-Gold is not a commodity.
-Gold is a barometer of fear.
-Gold is a barometer of confidence in Government.
-Gold is insurance.
-Insurance is not something to trade.
-Gold is money when money fails.
-Hyperinflation is a currency event, not an economic event.
-Hyperinflation is a currency event described as a loss of confidence in the currency.
-Gold in your hand eliminates counter-party risk.
-Gold is the high ground when the global tsunami hits.
-Gold removes financial agents between you and your assets.
Be strong in your conviction and do not be bothered by the return of the Prechterites and top callers.

Have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:

On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.

On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.

Accumulated Profits from Investing $1000 in each OPTIONTRADE signal 14 May 2010.jpg

Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more. have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

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Reader Comments (6)


Gold is creeping back in Hong Kong, trading at $1207.10 up about $8.00 at the mo.

July 1, 2010 | Unregistered CommenterGold Prices

Footnote 2:

London has just opened and gold is still creeping a long, up to $1211.30 as we write, with silver touching $18.00.

July 2, 2010 | Unregistered CommenterGold Prices

Just picked up AUY calls. Looking at NG (thinking to buy the stock).

Comments, suggestions and observations are appreciated...

July 2, 2010 | Unregistered CommenterBC


Good luck with AUY, its been falling apart for most of this year, could do a lot better, but will it? We bought more SLW Calls today, will write up on this weekend.

July 2, 2010 | Unregistered CommenterGold Prices

Whatever the governments of the 'western' world do it is too late, the debt is too big. The 'Eastern' world, the so called developing nations issue statistics which range from guesswork to outright lies. Investing in these countries implies hope that you will ever see you money again.There are no accounting standards in most of these nations or none that one would recognised as such. The real truth is that their currencies equate to the rubbish now being printed in the west. The end of this saga will be a new currency based upon gold and silver and certainly NOT oil and copper. Those left holding currency paper, well, tough luck. For verification of this then read the financial news as it is and not as you would like it to be. There will be no gold bear market this summer, nor a silver bear, FWIW I reckon that both will be much higher by the 31st of August than the current price. This is not investment advice just my opinion. everyone is entitled to do what that person wants, What is clear is that anyone who now sells gold and silver for paper currency will come to regret their shortsighted stupidity Roger Levinson.

July 3, 2010 | Unregistered CommenterRoger Levinson

Buy Sinclair's new book "A Pocketbook of Gold" - its the best thing on the subject.

August 3, 2010 | Unregistered CommenterRichard

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